By Kirk Pinho | Crain’s Detroit Business | June 24, 2021

Demolition of the Eastland Center shopping mall in Harper Woods is expected to begin early next year as a developer embarks on a $94.2 million project to replace the struggling property.

Mayor Valerie Kindle and Riverside, Mo.-based NorthPoint Development LLC formally announced the 1.03 million-square-foot, three-building Eastland Commerce Center project in front of its namesake on Vernier Road on Thursday morning.

Tim Conder, a local vice president for NorthPoint, which is also working with Farmington Hills-based developer LoPatin & Co., said following the press conference announcing the project, which Crain’s first reported Wednesday afternoon, that asbestos removal inside vacant department store properties can begin while the mall is still operating.

The $6 million demolition of the mall would be done with manual equipment rather than a controlled implosion and begin after asbestos is removed from vacant department store properties. Demolition would be completed by late spring.

“We can get in there, isolated from the rest of the mall while the mall is still operating,” Conder said. “Then when the mall closes, say after the holidays, then we can start bringing the buildings down.”

Another $3 million to $4 million would be spent remediating the overall site, which would be developed as industrial/warehouse space, capitalizing on a tight market and the site’s proximity to I-94.

“You have e-commerce demand and that would be something I think would be a good use of the site,” Conder said.

In all, some 762,000 square feet is to be torn down — the 640,000-square-foot shopping center and the nearby former Target Corp. store, which is 122,000 square feet, Conder said. The mall is owned by Great Neck, N.Y.-based Kohan Retail Investment Group and 4th Dimension Properties LLC, while the Target store is owned by the Minneapolis-based retail giant.

Conder said both properties are under contract with their respective owners and expected to close in October. He would not disclose the purchase price for either property, nor the value of brownfield financing or Public Act 198 property tax abatement expected for the project, which would be complete by April 2023 under current projections.
Conder said contractors have not yet been selected.

Tim Conder, vice president for Riverside, Mo.-based NorthPoint Development LLC, said his firm’s redevelopment of the Eastland Center site in Harper Woods would add 1.03 million square feet of industrial/warehouse space to a market that needs it. Photo Credit: Kirk Pinho/Crain’s Detroit Business

Industrial/warehouse demand

Under the plans, a 514,000-square-foot building would be built on 36 acres of the site, while 310,000 square feet would be built on 24.1 acres and 207,000 square feet would be built on 18.8 acres, leaving another 15 acres undeveloped.

The first building would have 316 parking spaces, while the second building would have 299 and the third would have 208.

The City Council still has to sign off on the proposal, which was presented to the planning commission on Wednesday night.

A redevelopment would capitalize on the state of the industrial/warehouse market, which has been a bright spot the last several years in the region as tens of millions of new square feet have been built, including much of it speculatively, as older building stock has aged into obsolescence, tenant needs have changed and the region’s economy has improved over the last 5-10 years.

In the first quarter, vacancy rates ticked upward slightly to 4.9 percent due primarily to new spec buildings being completed, according to a report from Newmark Knight Frank, a New York City-based brokerage house with offices in Southfield and Farmington Hills.

The report says that in metro Detroit the last five years, some 38.3 million square feet of industrial/warehouse space has been absorbed and another 23.4 million has been built to meet demand. Some 2.5 million square feet was completed in the first quarter, the report says. Of the 6.86 million square feet under construction currently, about 85 percent, or 5.88 million square feet, is for bulk warehouse to meet demand in a subsector that is just 1.3 percent vacant.

But if approved, it would also be built in an area more known for its residential and retail offerings than its industrial space.

Eastland’s major anchor tenants — Sears, Burlington Coat Factory, Macy’s and Target — have all closed as shoppers have flocked to other shopping centers and online. Photo Credit: Kirk Pinho/Crain’s Detroit Business

Mall’s latest chapter

Kindle said during the Thursday morning press conference that although she has fond memories of the mall and is sad to see it go, the 560 jobs expected at the new development would be beneficial to her community, which has about 14,000 residents.

“And there’s so much good that’s going to come out of this,” she said. “We haven’t even realized all the good that will be coming forward for us.”

She said online shopping led to Eastland’s deterioration, as did an owner who would not invest in the property.

“You all know that the majority of you all shop at Amazon,” Kindle said, addressing attendees at the press conference. “That’s one of the reasons that the demise of malls has happened. We tried our best to hold on to what we had here with Macy’s and especially Target, and it didn’t work because the owner … you see the parking lot.”

“We had to do what was best for our total community,” Kindle said.

The redevelopment would be the latest chapter — and last — in the mall’s history, which dates back to its development and opening in 1957 by J.L. Hudson.

Most recently, it was sold to Kohan and 4th Dimension, which paid just $3.125 million for it in 2018 after it went into foreclosure in 2016.

Mike Kohan, head of Kohan Retail Investment Group, said Wednesday afternoon that discussions with NorthPoint began about a year ago and that he anticipates a third quarter closing. He also declined to disclose the purchase price.

Various plans for the mall have surfaced over the years, including a splashy mixed-use development with apartments, retail and hotels along with the city’s municipal offices, police and fire departments, the Detroit Free Press reported in September 2018.

Nothing has come to pass, however.

Its major anchor tenants — Sears, Burlington Coat Factory, Macy’s and Target — have all closed as shoppers have flocked to other shopping centers and online.

It would also be the latest mall in the region to be demolished, following the razing of the 74-acre Summit Place Mall on the Waterford Township/Pontiac border, with plans to convert the site into a mixed-use development with offices and retail.

But others are proposed to be spared, including Northland Center in Southfield, which is the site of a proposed apartment development that, if completed as currently envisioned, would become the largest multifamily complex in the state with nearly 2,900 units across 97 acres of the 120-acre property. Commercial space is also envisioned.

Lakeside Mall in Sterling Heights was sold at the end of 2019 for $26.5 million to Out of the Box Ventures, a subsidiary of Miami, Fla.-based Lionheart Capital LLC. The 1.5 million-square-foot mall along M-59 between Hayes and Schoenherr roads is targeted for new uses.

Big projects

In the last year, Northpoint has also started work on the former Cadillac Stamping Plant in Detroit, its 916,000 square feet blighted for years across from the Coleman A. Young Municipal Airport. The company is tearing the property down and building 682,000 square feet in a $47.9 million project.

It’s not the only developer working on large-scale industrial and warehouse projects around town.

For example, Flint Development LLC, also based in the Kansas City, Mo. area, has more than 2.3 million square feet of speculative space envisioned for a sizable chunk of the former Ford Motor Co. Wixom Assembly Plant site as well as a portion of the Williams International Co. LLC property in Pontiac.

On the 104 acres in Wixom off Wixom Road, the developer has two buildings as part of its first phase of the project. Five buildings total are planned, encompassing some 1.61 million square feet.

In addition, a Pontiac Planning Commission document from October shows that an entity tied to Flint Development is seeking to build a $55 million, 711,400-square-foot logistics building as part of a development called the Oakland Logistics Park on a 44.5-acre site that had been owned by Williams International.

Ashley Capital, which is based in New York City but has an active Canton Township office, is also working on a smattering of projects around town.

And Walbridge Group is getting into the fray, as well.

The Detroit-based construction giant is putting up a 280,000-square-foot speculative warehouse building on 21 acres off I-96 at Grand River Avenue and South Hill Road in Lyon Township. Walbridge owns the 515-acre property encompassing the site.

And there is the 450,000-square-foot warehouse/industrial building called Means Logistics Park in Highland Park, in the development process by The Means Group and Ashley Capital. It is named after its late developer, Eric Means, who died last year.