An Iowa developer has bought the 58-acre Valley West Mall site for $11 million (£8.2 million). The company is now starting a major redevelopment project, but it must first deal with complex lease agreements and get support from the city. Brian Martin, president and chief executive officer of Threshold Capital and Threshold Development, completed the purchase of the long-troubled West Des Moines shopping center. His company plans to turn the large site into a mixed-use area with retail, housing, and entertainment. The project is expected to cost between $300 million and $350 million. However, the master plan depends on solving several legal and financial issues. The biggest challenge is a long-standing lease with department store giant JCPenney. The developer must also get city approval for public financing incentives.
Anchor tenant holds long-term lease rights
A key part of the redevelopment is a nearly 50-year-old lease held by JCPenney, one of the property’s original anchor tenants. According to reporting by the Business Record, the current agreement gives JCPenney major control over operations and the power to block major changes around its part of the property. The lease limits where new buildings, multi-family housing, or internal roads can be built without the company’s approval. Developer Brian Martin said dealing with the anchor store’s lease is an important step in completing the overall site plan. “It’s going to be transformational,” Martin told the Business Record about his plans for the property. “It’s going to be a very vibrant development. It will be very well thought out.” Talks between Threshold Capital and retail leaders are still taking place. At the same time, architects are working on a site plan that respects JCPenney’s rights while allowing the rest of the property to be developed.
Municipal incentives under consideration
To help pay for the large project, local government leaders in West Des Moines are considering major public financing options. As reported by television station KCCI, city officials have considered providing up to $110 million in public funding incentives. The proposed package would use tax increment financing, public infrastructure spending, and possible site improvements to help cover the early costs of removing the enclosed mall. The city council previously made the Valley West area an urban renewal district. This created a legal system for using future property tax revenue from the new development to help pay for public works, parking facilities, and utility improvements at the site. City planners say public investment is needed to address the area’s commercial decline. The area has seen lower foot traffic and retail store closures over the past decade.
Vision for a modern commercial hub
Valley West Mall opened in 1975 and was a major shopping center for central Iowa for four decades. Changes in shopping habits and competition from outdoor lifestyle shopping centers led to years of store departures, financial problems, and eventually foreclosure proceedings before the recent sale. Under Threshold Capital’s plan, the enclosed shopping center would be replaced by an open-air village-style development. It would include high-density housing, office space, restaurants, and public civic plazas. “It’s going to be something unique to the area that West Des Moines can be proud of,” Martin told the Business Record. He said early plans include major architectural water features and public lighting installations. Martin said early interest from possible retail, commercial, and residential tenants has been strong. However, formal leases will not be signed until city approvals and site plans are completed.
Next steps for site clearance
Before demolition can begin, Threshold Capital must submit a final site plan to the West Des Moines Plan and Zoning Commission and City Council. The developer expects to present final architectural plans after lease talks with JCPenney are resolved. If the city approves the incentives and the site plans pass regulatory review, the first stages of construction and infrastructure work on the 58-acre property could begin later. For West Des Moines officials and local residents, the sale is the clearest effort yet to decide the long-term future of one of the region’s largest commercial real estate properties.