Westdale’s rebirth nearly complete

Ahead of schedule, and defying the expectations of numerous skeptics, the full redevelopment vision transforming the former Westdale Mall into the Westdale Town Center in southwest Cedar Rapids, nearly a decade in the making, is coming close to fruition. Just a handful of lots remain available in the redevelopment outline for the former mall property, according to Todd Nelson, executive vice president and chief development officer for Frew Development Group, the firm that’s been contracted by the city to lead the 72-acre site’s development efforts. While the original “live-work-play” vision for the site has been modified somewhat to meet the realities of commercial development, Mr. Nelson said the overall redevelopment plan has been successful – perhaps even more so than many skeptics would have expected. “It's really picked up nicely after the pandemic and the derecho,” Mr. Nelson said. “There was a time where retail had an apocalypse and nobody was expanding. Everyone was contracting (getting smaller). Now things have started to come out of that, and there's a lot of activity for sure.” But it’s been a long and often difficult road for an area, and a former mall, that rose rapidly in the 1980s, then struggled mightily in the 2000s and early 2010s before its eventual demise. Ron Corbett, vice president of economic development for the Cedar Rapids Metro Economic Alliance, noted that the original heyday of indoor mega-malls like Westdale came at the expense of traditional downtown retailers, who flocked to the new suburban mall developments. That time, like most eras in retail and real estate development, was destined to end. “Retail is ever-changing, and the mall concepts started to have their own challenges,” Mr. Corbett said. “Westdale, in particular, lost major tenants and had huge financial problems. John Frew and his investors stepped up with a plan to reinvigorate the property. It has taken a little more time than what people anticipated, but they are in the home stretch.”

A brief history on Westdale

When Westdale opened in October 1979 after years of planning and construction, it was hailed as the foundation of a retail explosion on the city’s southwest side. The mall opened with two anchor tenants, Montgomery Ward and JCPenney. Younkers and Peterson Harned Von Maur (now known simply as Von Maur) joined as anchors in 1980. The mall thrived throughout the retail boom of the 1980s and 1990s, but lost its first anchor when Montgomery Ward closed in 2001; its replacement, Steve and Barry’s, a retail clothing chain specializing in university apparel, opened in 2005 and closed in 2008 in conjunction with that company’s bankruptcy. Von Maur closed at Westdale in 2008, and by that time more than 50% of the mall’s storefronts were empty. The mall was placed in receivership after H-N-W Associates, a part-owner, fell behind on mortgage payments, and General Growth assumed leasing duties for the property. The mall was then sold in a sheriff’s sale to Cedar Rapids Properties Inc. in 2007, and the property’s retail decline became evident. Several city and county offices occupied portions of the mall after the 2008 flood, including the Cedar Rapids Public Library, which had lost a large portion of its collection in the flood. Leasing duties were handed over to the Frew Development Group, based in Denver, in January 2013, and the mall formally closed in March 2014. The majority of the mall’s original structure was demolished in various stages in 2014, save JCPenney; Von Maur, which has been transformed into Ross Dress for Less and a VA medical clinic; and Younkers, which became a U-Haul storage and vehicle rental outlet following the bankruptcy of Younkers parent company Bon-Ton Stores in 2018.

Development projects plentiful

While developments cropped up sporadically around the site after 2014, the pace of new projects has accelerated in the last handful of years, with landmark developments such as PetSmart, Ray Orthodontics and Freddy’s Steakburgers building new locations. Sugarfire Smoke House opened in the former F&M Bank building on the site; Ross Dress for Less, the VA Health System Outpatient Clinic and Shoe Dept. Encore (which has since closed) moved into spaces in the former Von Maur building, where two spaces remain available for development; and U-Haul Moving and Storage took over the former Younkers building, joining a nationwide trend of U-Haul franchises in former mall spaces. The list of developments since 2018 is a lengthy one. 

Key developments:

• Tru by Hilton opened an 82-room hotel at 3900 Westdale Parkway SW in March 2018.
• Parkway West Tower 1, a four-story, mixed-use facility with first-floor retail and 33 luxury apartments on the upper floors, opened in 2019. The first floor now houses Escapology, an escape room concept; GDMS Beauty Supply; Select Physical Therapy; and Frew Development’s local offices. And Great Harvest Bread Company will be opening its second Cedar Rapids location in the building in the near future, leaving one spot available.
• Take 5 Oil Change opened its first Cedar Rapids location recently at 2780 Edgewood Rd SW.
• A new RNR Tire Express is under construction at 2780 Edgewood Rd. SW.
• Work has begun on the second Cedar Rapids location of the Boulder Tap House at Westdale, which will join the restaurant’s existing location at Lindale Mall.
• Mandarin Spice, which has an Asian Grill restaurant in the Collins Road Square, has purchased two lots at Westdale, but their plans for the lots are currently unknown.
• A second Westdale hotel, Home2 Suites by Hilton, is under construction at 4000 Westdale Parkway SW. The 84-unit hotel is set for completion by July.
• Ironside Apparel, an athletic apparel supplier, has purchased a lot at Westdale. Owner Mark Ironside confirmed he plans to move his company’s current retail store on Edgewood Road SW to the new location at some point, though he said specific construction plans haven’t yet been established.
• And construction of four more residential towers, to be known as Parkway West II through V, is slated to begin this spring. The $34 million project, comprising three 52-unit buildings and a 44-unit building on property just west of the former Younkers building, will add another 200 housing units to the Westdale development.

Mr. Nelson said he expected that the final developments at the site would likely consist of small offices or restaurants, rather than larger retailers. He also noted that the trend nationwide is toward redevelopment of former “mega-malls” like Westdale, and that he felt the Cedar Rapids development was “ahead of the curve” compared to other similar sites across the country. And despite the sentimentality many feel about the former Westdale Mall, the infrastructure of that facility had deteriorated substantially before its demolition. “We lovingly joke that some of the staff that were in place then literally knew where to put the buckets when it rained,” he said.

City has development agreement with Frew

In 2018, the city renegotiated its development agreement with Frew, setting a new 20-year agreement that refinances loans with CRBT, a $5 million bond, a $2.26 million reserve fund and operating proceeds into a new $21.75 million loan with NBH Bank. A TIF (Tax Increment Financing) district is also in place for Westdale. TIFs allow local governments to invest in economic development projects, then pay later for those investments by capturing the future anticipated increase in tax revenues generated by the projects. The TIF proceeds are used to meet the developer’s debt obligations. To date, Frew has met all of its financial obligations and job creation targets for the Westdale Town Center, said Cedar Rapids economic development manager Caleb Mason. Since the redevelopment project began, the taxable valuation of the Westdale site has risen from $7 million in 2013, when Frew took over the Westdale site, to more than $62 million at the beginning of 2022, and estimates indicate that valuation could rise to as much as $75 million by 2024. “There's been a significant increase in values over time,” Mr. Mason said. The use of TIF for the Westdale project wasn’t without its critics, Mr. Corbett said. “Historically cities have been reluctant to use tax increment financing for retail,” he said. “Jobs in the retail sector don’t pay as well as other industries like manufacturing, and elected officials don’t want to be criticized for incentivizing lower-paying jobs. But there was really no choice on the Westdale project. The city had to step up and support the revitalization effort, because it was in the city’s best interest.”

Previous coverage

https://corridorbusiness.com/cedar-rapids-council-oks-action-plan-for-westdale-area/

Optimistic outlook, despite headwinds

As with any large-scale redevelopment, Westdale Town Center has experienced its setbacks – and its critics. The original “live-work-play” concept that called for more green spaces on the property has somewhat fallen by the wayside, due in part to developers’ requests. As an example, Mr. Nelson said, original development plans called for a park-style area near Ross Dress for Less, but that plan was scrapped when Ross officials said they wouldn’t proceed with their plans unless the space could be used for parking. In addition, some businesses in the Westdale Town Center have fallen by the wayside in recent years, including Shoe Dept. Encore, Chipotle Grill, Noodles and Company and Saucy Focaccia. But as 13 new projects prepare to come online at Westdale, Mr. Nelson said he expects the redevelopment to be essentially complete in the next three to five years. Yet Mr. Nelson isn’t inclined to slow the project’s momentum. “We are aggressively in deal-making mode,” he said. “We are leasing, building to suit, or selling lots very affordably in order to complete the project as soon as possible. We have incredible flexibility in terms of lease versus build to suit leases versus selling lots. We have flexibility in how we pay for build out costs and how we amortize those costs into lease deals.” The economic headwinds of recent years certainly haven’t helped, he noted, but the end result should be seen as successful. “It certainly has been substantially slower than we ever had hoped it would be,” he said. “We took it one step at a time and tried not to bite off more than we could chew. At the beginning, the city took a leap of faith with us. We had a plan that we certainly would have liked to have done that would have been slightly different than where we're at. But the retailers and the developers drive that. Now, it's coming together. We've stayed the course, and it's going to be a good thing at the end of the day.” Mr. Corbett concurred, noting that the city’s support of the project, while controversial to some, has been essential in propelling Westdale’s rebirth as an economic force. “The development is a great example of a public/private partnership that created a win for the community,” he said. “In this case, there’s more retail, more jobs and a higher property tax base. That’s a win in anyone’s book.”