If there is a zombie apocalypse, Richmonders will have one less place to seek shelter.
Last week marked the groundbreaking for Stonebridge, a new mixed-use project that will replace the abandoned Cloverleaf Mall in Chesterfield County. Demolition is underway.
The project, masterminded by Charlotte-based Crosland Southeast, is slated to include 300,000 square feet of new retail space. The first portion will include a 123,000-square-foot Kroger, which will be the grocer’s largest store in the nation, as well as just over 20,000 square feet of additional small shop space. Additionally, Crosland plans to build 350 apartments on the property and include office development.
Crosland has acquired about 28.5 acres of the former mall site and will purchase the rest over time from the county. Crosland will pay the same amount that the county spent assembling the parcels, about $16 million plus interest.
BizSense caught up with James Downs, a principal of Crosland, to talk about how the project is being funded and why he thinks retail can succeed again at this location.
Below is an edited transcript.
Richmond BizSense: You’ve been waiting a long time for this. How does it feel to finally be underway?
James Downs: It’s been nearly five and a half years since we engaged in discussions with the county to redevelop the mall property. This is a very monumental step in what will be a great project. I’m very excited.
RBS: What delayed the project this long?
JD: The debt markets essentially being frozen for construction loans. At the time we would have placed construction debt on the project, the economy turned drastically and quickly. The timing was just not good, but we persisted and we pursued untraditional means of financing in order to move forward with the first phase of construction.
RBS: How have you funded the first phase?
JD: There is not a loan. There is no debt. It is all cash. We have engaged an equity partner and received county assistance.
The demolition and infrastructure is largely being financed through the Community Development Authority established on the property, which is paid for through incremental taxes established throughout our development, which are new property and sales taxes created.
Our equity partner is Hutensky Capital Partners. They and Crosland Southeast are funding cash to do the remaining portion of Phase 1. The total cost is $27 million, with $11 million coming from the CDA.
RBS: What happened to the plan to sell bonds to finance the project?
JD: We did not float bonds. The county made the decision to pursue a different arrangement where they are providing a loan to fund the infrastructure as opposed to from bond proceeds. It was an effort to pursue the project because bond markets have been quite volatile. Their decision to do that is a very bold decision that gave us the ability to move forward.
RBS: Was there ever a point when you thought the project might not happen?
JD: I couldn’t accept it. We were fully vested and very persistent. There are not many projects on this scale being developed anywhere in the United States. There were a lot of naysayers and people that didn’t believe it was going to happen, but we did. We were determined to find a way, and we did just that.
RBS: The site of the development is that of a failed mall. Why do you think another large retail development will be successful?
JD: Clearly the enclosed mall is not the way of the future, nor have we ever anticipated that we would build back with the same gross leasable area that the original mall entailed. It is large in scale, but a mixed-use project is more sustainable over time given the mix of necessary retail like a large grocer and other services, as well as multi-family and eventually office.
RBS: How did you come across the opportunity to redevelop Cloverleaf in the first place?
JD: We were not new to the Richmond development scene at the time. We had developed Rutland Commons in Hanover County and were active with Kroger there.
Cloverleaf was just an opportunity we saw. In a lot of ways, it almost took someone from the outside that wasn’t too close to it to see its potential. For local residents who have seen the decline of the mall, it is hard to envision how it could be repositioned as a catalyst to revitalize the Midlothian corridor. Sometimes you can be too close to it to see that potential, and we were able to take a fresh look.
If there is a zombie apocalypse, Richmonders will have one less place to seek shelter.
Last week marked the groundbreaking for Stonebridge, a new mixed-use project that will replace the abandoned Cloverleaf Mall in Chesterfield County. Demolition is underway.
The project, masterminded by Charlotte-based Crosland Southeast, is slated to include 300,000 square feet of new retail space. The first portion will include a 123,000-square-foot Kroger, which will be the grocer’s largest store in the nation, as well as just over 20,000 square feet of additional small shop space. Additionally, Crosland plans to build 350 apartments on the property and include office development.
Crosland has acquired about 28.5 acres of the former mall site and will purchase the rest over time from the county. Crosland will pay the same amount that the county spent assembling the parcels, about $16 million plus interest.
BizSense caught up with James Downs, a principal of Crosland, to talk about how the project is being funded and why he thinks retail can succeed again at this location.
Below is an edited transcript.
Richmond BizSense: You’ve been waiting a long time for this. How does it feel to finally be underway?
James Downs: It’s been nearly five and a half years since we engaged in discussions with the county to redevelop the mall property. This is a very monumental step in what will be a great project. I’m very excited.
RBS: What delayed the project this long?
JD: The debt markets essentially being frozen for construction loans. At the time we would have placed construction debt on the project, the economy turned drastically and quickly. The timing was just not good, but we persisted and we pursued untraditional means of financing in order to move forward with the first phase of construction.
RBS: How have you funded the first phase?
JD: There is not a loan. There is no debt. It is all cash. We have engaged an equity partner and received county assistance.
The demolition and infrastructure is largely being financed through the Community Development Authority established on the property, which is paid for through incremental taxes established throughout our development, which are new property and sales taxes created.
Our equity partner is Hutensky Capital Partners. They and Crosland Southeast are funding cash to do the remaining portion of Phase 1. The total cost is $27 million, with $11 million coming from the CDA.
RBS: What happened to the plan to sell bonds to finance the project?
JD: We did not float bonds. The county made the decision to pursue a different arrangement where they are providing a loan to fund the infrastructure as opposed to from bond proceeds. It was an effort to pursue the project because bond markets have been quite volatile. Their decision to do that is a very bold decision that gave us the ability to move forward.
RBS: Was there ever a point when you thought the project might not happen?
JD: I couldn’t accept it. We were fully vested and very persistent. There are not many projects on this scale being developed anywhere in the United States. There were a lot of naysayers and people that didn’t believe it was going to happen, but we did. We were determined to find a way, and we did just that.
RBS: The site of the development is that of a failed mall. Why do you think another large retail development will be successful?
JD: Clearly the enclosed mall is not the way of the future, nor have we ever anticipated that we would build back with the same gross leasable area that the original mall entailed. It is large in scale, but a mixed-use project is more sustainable over time given the mix of necessary retail like a large grocer and other services, as well as multi-family and eventually office.
RBS: How did you come across the opportunity to redevelop Cloverleaf in the first place?
JD: We were not new to the Richmond development scene at the time. We had developed Rutland Commons in Hanover County and were active with Kroger there.
Cloverleaf was just an opportunity we saw. In a lot of ways, it almost took someone from the outside that wasn’t too close to it to see its potential. For local residents who have seen the decline of the mall, it is hard to envision how it could be repositioned as a catalyst to revitalize the Midlothian corridor. Sometimes you can be too close to it to see that potential, and we were able to take a fresh look.