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Trolley Square has been purchased for $39.6 million by a Portland, Ore.-based real estate investment company that plans to spend another $40 million to expand and renovate the downtown-area mall.
ScanlanKemperBard, known as SKB, plans to add a 50,000-square-foot anchor store to the mall and build an underground parking structure in an area that is now a surface parking lot.
SKB purchased Trolley Square, which sits on 13.5 acres at 600 South and 700 East, from real estate investment company Simon Property Group, whose predecessor company, Melvin Simon & Associates, acquired the mall in 1986. Simon Property Group spokesman Les Morris declined to say why Simon decided to sell.
Trolley Square, built on an old trolley complex used until 1945, became a shopping mall in the early 1970s. It has been spruced up over the years, but nothing has been done to the 239,000-square-foot property of the magnitude that SKB is planning.
"It's a very substantial renovation, and it's a large sum of money," said Chad Moore of commercial real estate brokerage Commerce CRG. He said SKB undoubtedly is willing to invest that kind of money because of the property's attractive location. Retailers, Moore said, are clamoring for locations around downtown Salt Lake City.
Bob Scanlan, chairman and CEO of SKB, said Trolley's location can't be beat.
"We think we will do very well in terms of return to our investors," he said.
Trolley has faced some tough times in its history. But in recent years it has done fairly well and today has a vacancy rate of only about 5 percent - good by industry standards - though some tenants have complained of declining foot traffic.
A complete overhaul of the mall is in the first phase of the project, set to begin in January and be complete around summer 2007.
In the second phase, SKB plans to add a building for a new anchor tenant on a surface parking lot east of Hard Rock Cafe, as well as an underground parking structure. That phase, dependent on gaining a commitment from a major retailer, could start in June and be completed in nine to 12 months.
Space for the new tenant, Scanlan said, would be nearly four times larger than Restoration Hardware, Trolley Square's largest tenant. Restoration leases about 13,000 square feet of space. No. 2 Pottery Barn occupies about 10,000 square feet.
The company also could add 150 condominium units. To build them, it would tear down the mall's existing parking structure, build a new one and add condominiums on top. The residential units probably would be built by an outside developer.
"We think residential would be very successful," Scanlan said.
Shoppers at Trolley Square on Tuesday said they hope renovations do not change the mall's individuality.
"I like the ambiance," said Karen Lupo, of Washington state, in town shopping on one of her regular visits to Utah. "I think they ought to keep it the way it is."
Jennifer Graves, of Salt Lake City, also wants the mall's look to remain the same, although she would like to see more moderately priced stores.
"They have a lot of neat stuff here, but something like a Macy's would be nice," she said.
Wendy Lee, of Alpine, who was shopping in children's apparel store The Secret Garden, said she hopes Trolley Square will maintain its lineup of small speciality stores and not morph into a chain-store development.
But just how many of the mall's existing tenants will remain is unclear. SKB said it would try to improve the mix of tenants, which means some will be encouraged to leave.
One tenant contacted Tuesday said she hopes a new owner will help bring in more customers.
"I love the property, I think it's really beautiful and I enjoy being here," said Karri Jackson, owner of The Next Big Thing, a gift store. "But we need more shoppers. We do have some very loyal customers, but we could do much better."
Trolley Square
* What it is: A 239,000-square-foot shopping mall, whose tenants include Banana Republic, Brookstone, Hard Rock Cafe, Pottery Barn, Sharper Image and Williams Sonoma. Ann Taylor left near the end of July for The Gateway.
* Location: 600 S. 700 East, Salt Lake City
* Who's buying it: ScanlanKemperBard Cos. LLC, which invests in real estate in the western United States, including several office and industrial properties in Salt Lake City.
* Who's selling it: Simon Property Group, a real estate investment trust that specializes in the development and management of malls.
Trolley Square questions
Q. What is happening?
A. The mall has been purchased by Portland, Ore.-based ScanlanKemperBard, which plans a major renovation and expansion on the mall's original 13.5 acres. The mall will be overhauled in the first phase, set to begin in January and be completed next summer. In phase two, SKB plans to add building for new anchor tenant on parking lot east of Hard Rock Cafe and north of Banana Republic, as well as underground parking. Work could start could start in June 2007 and be completed in nine to 12 months.
Q. Will the mall remain open during renovations?
A. Yes, though certain stores might close temporarily.
Q. Will the tenants remain the same?
A. Many will remain, although others will be asked to leave as SKB tries to create a different mix of tenants.
Q. Are there any details about condominiums that might be added?
A. SKB wants to build 150 units on the property's west side. It would tear down an existing parking structure, build a new one and add condominiums on top.