VOL. 125 | NO. 60 | Monday, March 29, 2010
Midtown Big-Box Site Not Dead – Yet
ANDY MEEK and ERIC SMITH | The Daily News
Friday’s foreclosure notice announcing a sale on the courthouse steps of dozens of Midtown properties where a long-awaited mixed-use project has been planned for years is not an automatic death knell for the development.
The ambitious plans for the site, which at one time attracted the attention of Target as a big-box anchor, could still move forward if the stars align. That’s true for the subject of any first-run foreclosure notice, where a forced auction can sometimes be avoided if the debtor brings his loan obligations current.
No one close to the Midtown Memphis project, however, is commenting on the record yet about how WSG Memphis LLC’s default of a $14 million loan through Lehman Brothers Holdings Inc. will affect the deal.
Lehman Brothers in September 2008 filed for Chapter 11 bankruptcy protection, further complicating WSG’s tenuous financial situation.
Lehman has filed foreclosure actions against WSG properties elsewhere, apparently a product of the bankrupt New York financial firm’s slow unwinding of its loan book.
Commercial real estate brokers weren’t overly surprised to hear about the foreclosure because of the Lehman connection and because this has become a common fate for sites around the country due to difficult financing and an overall sluggish economy.
“Development has come to a screeching halt unless it’s specifically tenant-driven,” said Danny Buring, principal at The Shopping Center Group. “They were trying to sell that as a mixed-used project, and I think mixed-used projects, unless there’s a specific tenant driving the deal, are the most cumbersome to get financed right now.”
Some sources close to the situation spoke off the record about the deal, saying its potential dissolution is good news because WSG paid too much for the property and didn’t garner as much interest in the development as it initially thought.
Still, Buring and others said they believe a Target-anchored center in Midtown will succeed because of the market’s population density and lack of big-box offerings, but they aren’t sure that the Poplar-Cleveland locale is the best site.
“There is enough demand and I think there’s probably enough desire from Target to eventually have a store in Midtown, but I don’t know where and – because of the economy – when,” Buring said. “They’ve cut their new store openings probably by 70 percent.
“Everything’s getting pushed back three years in general. Until the financing comes back, there’s not going to be anything new built.”
Big-box retail has had trouble getting built in Midtown because of opposition from various groups and a lack of available land, one of the best examples being the stalled Overton Square development.