Norfolk purchases struggling MacArthur Center
In early June, Norfolk City Council members approved plans for the city to purchase the struggling MacArthur Center downtown mall for up to $18 million.
The 23-acre mall is owned by Wells Fargo & Co., which holds the mall following a loan default by MacArthur Center’s previous owner, Connecticut-based Starwood Property Trust.
MacArthur Center was listed for sale in January by JLL, though no price was listed at the time. The mall includes 914,751 square feet of leasable area. Current anchors are Dillard’s Inc., with 253,616 square feet, and Regal Cinemas, with 80,210 square feet. Another 160,000-square-foot anchor spot is vacant. The property also has a 4,000-space, multistory parking garage.
In recent years, the mall has lost major tenants such as Nordstrom, in April 2019, the Apple Store, in 2021, and restaurants Texas de Brazil and California Pizza Kitchen.
The city will now own everything at MacArthur Center except for the Dillard’s building, which is owned by the retailer.
Norfolk Mayor Kenneth Cooper Alexander says that buying the mall would enable the city to “play an active and strategic role” in the property’s future. In the short term, the city plans to continue operating MacArthur Center as a mall and planned to hold discussions with mall tenants in what Alexander said in early June was to be a “seamless” transition. The city did not initially release any long-term plans for the mall.
The mall’s most recent assessment was nearly $25 million — $20.7 million in land value and $4.2 million in improvement value. That’s down significantly from its
July 2022 assessment, when it was valued at $51.8 million, including $24.8 million for the land, city records show.
According to the purchase agreement, the city was to pay $11.05 million for the mall, with the rest of the city allocation going to cover consulting, legal and other fees. The deal was expected to close by August.
The mall is now more than half vacant, according to JLL. Starwood Property Trust bought the mall in 2014 for $265.5 million from Michigan-based Taubman Centers Inc., as part of the $1.4 billion purchase of seven shopping malls. However, Starwood defaulted on a $750 million loan in 2019, and MacArthur Center is now owned by Wells Fargo and managed by Syracuse, New York-based Spinoso Real Estate Group.