On its 50th birthday, Crabtree Valley Mall is up for sale. What does the future hold?
Crabtree Valley Mall just turned 50, and it’s up for sale. But after sitting on the market for nearly a year, it still has no takers.
Kane Realty Corp. — the Raleigh real estate powerhouse behind the North Hills development — was in advanced negotiations earlier this summer to buy the 57-acre property located along Glenwood Avenue just outside the Beltline.
But talks are now off the table, Kane Realty confirmed.
“Yes, that is correct,” Bonner Gaylord, its chief operating officer, said in an email to the N&O. “It’s not something that we can comment on right now.”
Now, as the holiday season ramps up, one of the Triangle’s busiest shopping centers is facing an uncertain future. Crabtree was listed by global real estate investment bank EastDil Secured — the first time since it opened in 1972, the Triangle Business Journal reported earlier this year. It has an assessed value of roughly $382 million, according to property records.
It’s unclear if potential buyers are scouting the property. Eric Zimmerman, managing director at EastDil Secured, didn’t return calls for comment.
But its longtime owners, CVM Holdings, are facing dwindling prospects at a time when many big-box retail stores are dying. A longtime fixture of American culture, traditional enclosed malls continue to struggle amid the rise of e-commerce and, more recently, the COVID-19 pandemic.
In the Triangle, several malls have faced struggles in recent years. Northgate Mall in Durham closed in 2020 and is now being redeveloped. In 2021, Cary-based Epic Games purchased Cary Towne Center for $95 million, then demolished it to make room for its new headquarters.
Crabtree hasn’t gone unscathed. The mall has two anchors left after Sears closed in 2018. One is Macy’s; the other is Charlotte-based Belk, which filed for bankruptcy in February 2021.
Prospective buyers also face another challenge: The property was built in a floodplain. Crabtree Creek, a 29-mile tributary of the Neuse River, runs directly behind the mall. Its risk of flooding is listed as “high” on state floodplain maps for both hazard and impact.
Over the years, dozens of flooding events have affected the mall. In 2006, heavy rains from Tropical Storm Alberto flooded the lower-level parking lots and parts of the main building. About a half-dozen stores sustained extensive water damage. Most recently, in 2018, after two days of steady rain, Crabtree Creek jumped its banks, blocking several streets and flooding the mall’s grounds.
Ben Brown, stormwater administrator at the City of Raleigh, said the mall opened when there were different floodplain regulations.
Beyond the creek, the property’s flooding is exacerbated by drainage problems from nearby properties sitting at higher elevations than the mall. It’s becoming more frequent with climate change, Brown said. “[The pipe systems] are undersized for how much is crossing from the uphill side of Glenwood Avenue down to the Crabtree Creek side. Those drainage lines are getting backed up,” he said.
The mall is grandfathered property, he said, but any major redevelopment constituting 50% of its total value would have to be brought up to code. While he doesn’t believe it will prohibit redevelopment, it would cost developers time and money to get plans approved by the Federal Emergency Management Agency, he said.
“You’d have to make a lot of allowances to bring it up to modern floodplain standards,” he said.
Crabtree isn’t a dead mall
The property is zoned for commercial mixed-use up to 12 stories. In 2019, the mall’s owners announced plans for a $290 million redevelopment that included a 30-story mixed-use tower at the site of the former Sears building. There were also calls for a restaurant, office, hotel, entertainment and green spaces. But in the end, nothing happened.
Debora Overholt is general manager at California-based Pacific Retail Capital Partners. The firm has managed the mall since 2020 after Plaza Associates had its contract terminated.
She said sales and foot traffic inside the mall remain high — on par “with pre-COVID traffic levels.”
Retailers are also lining up to lease space, she said. “Brands such as lululemon have chosen to relocate and expand their pop-up store presence,” she said. “Nest Décor has also selected Crabtree to open a new location in early 2023.”
Raleigh resident Cam Johnson can attest to the mall’s popularity. For the last six years, he has managed the mall’s Santa station owned by California-based Amuse Matte, currently in full swing in the mall’s main atrium.
“This is our most successful set on the East Coast,” he said, as a steady line of parents and their kids waited patiently to sit on Santa’s lap on a recent Friday afternoon. “We get 10,000 people come through every season.”
For over a decade, Charles Lanier helped manage the mall at his former post as director of leasing for Plaza Associates. When he left in 2020, he said, Crabtree was one of the most successful malls in the Carolinas.
“It’s been a touchstone for the Triangle for over half a century,” he said. “For me personally, it has always been a part of my family. My mother always loved going to Hudson-Belk in the 70s. In 1986, I rented my tuxedo for the senior prom from VIP Formalwear. My children continue to ask to go to Kanki for their birthdays. I did most of my Christmas shopping at Crabtree this year.”
Vijay Shah, senior vice president at Raleigh-based Trademark Properties, has worked in commercial real estate around the Triangle for almost 30 years. He said the property is real estate ripe for redevelopment.
“Crabtree is not a dead mall,” he said. “But it’s going to take a lot of money to redevelop it. No new buyer is going to just buy it and keep it the way it is. That’s failure for sure.”
Shah said he could see a developer scooping up the site to transform it into a mixed-use space with an entertainment complex like Topgolf or indoor kart racing — or even a life science development.
“I don’t see someone scrapping this property because of the creek impacts, and what you can build on it. The infrastructure that’s there — you could probably never build that much square footage on that site today.”
Ultimately, he said, the mall’s purchase will come down to its price tag. Shah speculated the sale price could reach north of $95 million — more than Cary Towne Center — and remained optimistic that a buyer is out there. “Money can solve most problems,” he said.
This story was originally published December 19, 2022 at 5:30 AM.
