Economic Development and Real Estate & Retail

New owner brings hope for Eastgate property: Demolition would pave way for redevelopment

April 11, 2005

Every end is a beginning, the proverb goes.

Accordingly, the probable demolition of nearly vacant Eastgate Mall by new owners JTL Capital LLC isn't causing much heartbreak among city officials and east-side residents.

"I was thrilled to hear they plan to demolish [Eastgate]," said Ruth Ann Walker, a member of the Warren Township Development Commission. "It opens that parcel up for bigger and better things."

What that might be isn't yet clear, and Dallas-based JTL so far has divulged little about its plans. But early discussions with city officials have indicated the site might not be used for retail, at least not entirely, said Gordon Hendry, the city's director of economic development.

Hendry stressed that JTL is in "very preliminary stages" of determining the future of the nearly 40-acre site, but said he believes the company will begin work, at least demolition work, on the site within the next year. The city

will continue discussions with JTL as plans progress, Hendry said.

"There are a lot of positives to that location, "Hendry said, noting the stability of the neighborhoods around Eastgate and new retail developments further east on Washington Street.

JTL principals David Lane and Brucker Stensrud couldn't be reached for comment.

According to the firm's Web site, JTL, founded in 1993, acquires and develops shopping centers, condominium developments, hotels, office space and mixed-use developments nationwide.

The company's principals have a good reputation in their home state of Texas, said Jack Crews, a Dallas investment broker with Trammell Crow Co. Even though JTL is a relatively new firm, Managing Director Lane has been in the real estate business for many years, he said.

"They've rehabbed shopping centers all around Texas," Crews said. "I don't think I've heard anything negative about them in the marketplace."

JTL's purchase gives them substantial acreage at the high-traffic intersection of Shadeland Avenue and Washington Street. The deal didn't include an eight-acre lot fronting Washington Street that was formerly occupied by Cub Foods and is still owned by the grocery store's parent company, Minnesota-based SuperValu Inc.

JTL so far hasn't expressed an interest in the Cub Foods property, said Bryan Chandler, principal of locally based Eclipse Real Estate. The property is listed for $2.5 million.

Potential buyers of the Cub Foods site have included some retail users, but the property was recently under contract for a non-retail use, Chandler said. That deal fell through. Other potential uses have included office/distribution and institutional use, he said.

Although the Shadeland Avenue/ Washington Street interchange is highly traveled, several local real estate experts have said the Eastgate site's most promising use may be other than retail. Once the east side's most prominent shopping center, the mall began its decline in 1974 when Washington Square Mall opened a few miles east. Most east-side retail development now is concentrated around Washington Square and northeast on Pendleton Pike.

Observers are confident that JTL will be more aggressive in redeveloping Eastgate than its previous owners. JTL purchased Eastgate March 8 from a Philadelphia-based Wachovia Securities fund. The fund held title to the mall for less than a year after buying it in a tax sale last fall for $1.1 million.

More than $370,000 in back taxes on the mall were paid in early March, said Cindy Land, administrative deputy in the Marion County treasurer's office. It wasn't clear from the treasurer's records whether the taxes were paid by the Wachovia fund or by JTL, Land said.

The back taxes accumulated during the two years the mall was owned by North Carolina investor Haywood Whichard. Whichard shut down the mall last June, although a few tenants remained past the closing date.

Whichard and JTL have crossed paths before. In 2003, the city of Fort Wayne was planning to acquire the nearly vacant Southtown Mall from Whichard when Whichard announced JTL had made an offer to buy the property for $6 million, twice what the city was offering.

That offer never went anywhere, and Fort Wayne eventually took the mall through eminent domain. The city is currently demolishing it to make way for a Menards home improvement store.
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