Lakeside Mall in Sterling Heights sold, new owner plans to expand beyond retail

Lakeside Mall in Sterling Heights has been sold, with the new owner sharing city officials' vision of a revamped area that includes new uses of the sprawling mall property other than retail.

Out of the Box Ventures, a subsidiary of Miami-based Lionheart Capital, closed on the property Tuesday and will become the new owner of the mall immediately, the city said in a news release Wednesday.

Out of the Box Ventures paid $26.5 million for the 1.5 million-square-foot mall on Hall Road between Schoenherr and Hayes roads, Crain's Detroit Business reported Wednesday.

For five years, city leaders have been working on a new vision for the area around the mall, which has seen the departure of several large stores, and helping to secure new ownership. That area, historically, has been the city's largest retail hub.

The city said that long-term plans for the mall included adding new uses to the property other than retail over a period of time, such as residential and office.

“We are excited about our plans to revitalize Lakeside Mall with a new wave of premium tenancy and engaging activations," said Ophir Sternberg, CEO and founding partner of Lionheart Capital in the city's news release.

Sternberg added: "One of the defining factors in our decision to close on this asset is the city’s progressive development culture. We share the city’s vision for the future of this property and look forward to significant collaboration with city officials and the community to ensure Lakeside Mall’s future is promising and a point of pride for the entire region. We have a strong track record for success and expect nothing less for this exciting endeavor.”

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The mall was acquired by Out of the Box Ventures after General Growth Properties Inc. defaulted on its $144 million mortgage loan.

Out of the Box Ventures is a commercial real estate fund that has, in under three years, "created a proprietary method for unlocking new value in formerly distressed commercial retail space and are scaling rapidly," the city news release stated.

It read: "Out of the Box Ventures’ vision is to transform these retail spaces into dynamic mixed-use destinations, designed to be as functional as they are impactful in the revitalization of their surrounding areas and communities."

The city formulated the Lakeside Sustainability Plan in 2015, administered a retail market study in 2016 and continued "sustained, targeted outreach to retailers and developers interested in the Lakeside area" as brick-and-mortar malls declined across the country.

Last year, the city adopted the Lakeside Overlay District that allows for a mixture of uses at the mall property as an incentive to re-imagine the 100-acre site.

“Our goal has always been to see Lakeside transform from a traditional retail mall into a mixed-use space focused on walkability, placemaking and community,” Mayor Michael Taylor said in the release. “I’m proud of the proactive work we’ve done to help position the Lakeside Mall area for continued success for many decades to come.”

Luke Bonner, the city's senior economic development adviser, said a redevelopment project of this size could equate to "hundreds of millions of dollars just for construction."

“But this project’s economic impact to the region could far exceed the construction value," he said. "It’s imperative that we work toward preserving this critical tax base and increasing the job base of 1,000 currently supported by Lakeside Mall.”

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In 2017, the city released some concepts for the area around the mall — currently a vast open space of 7,745 parking spots. They included residential and office developments, parking decks, green space and even an urban beach on the lake surrounding about half the mall site.

Lakeside Mall is still operating with large retail tenants including JCPenney and Macy's. It lost another large retailer, Lord & Taylor, a few months ago.

Out of the Box Ventures has 4 million square feet of retail space in 17 states that consists of regional enclosed malls, shopping centers and big box retail, according to the company's website, including a half-dozen other sites in Michigan. Those locations are: Battle Creek Plaza in Battle Creek; the former Macy's box and former JCPenney box, both at Lakeview Square Mall in Battle Creek; the JCPenney box in Bay City; the former Macy's at Birchwood Mall in Fort Gratiot, and the former JCPenney box at Midland Mall in Midland.

The fully-enclosed Lakeside Mall opened in 1976 and was developed by A. Alfred Taubman and Rodamco. The mall expanded in 1990 and got a $3-million renovation in 2007, including new signs and better pedestrian access.

The mall is situated on one of the busiest retail corridors in the state — a corridor that also includes the Mall at Partridge Creek, an open-air mall just a few miles east of Lakeside Mall in Clinton Township.

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Contact Christina Hall: chall@freepress.com. Follow her on Twitter: @challreporter.