Boise Factory Outlets, which struggled to attract retailers and customers during most of its 28 years off Interstate 84 in East Boise, has been sold.
The Gardner Co., which built the 18-story Eighth & Main building in downtown Boise, is the new owner. The Salt Lake City company is a major Treasure Valley developer with an office in Boise.
After selling several buildings in Salt Lake City, Gardner looked for an acquisition that would allow it to defer taxes through a so-called 1031 Exchange, allowed under Internal Revenue Service rules. Under the U.S. tax code, investors who sell real estate can avoid capital-gains taxes by parking sale proceeds with a 1031 exchange company and then using that money to buy another property. 1031 refers to the section of the tax code that permits this.
“And this kind of fit the bill,” David Wali, Gardner’s executive vice president, said Monday by phone.
Long term, the company plans to develop the property, he said. It’s not likely to remain an outlet mall.
“It could be as simple as modifying the existing buildings to accommodate users who want to be in that area and need light industrial or office-flex buildings,” Wali said. Retail development lends itself to such uses, “because they need big areas to park, and they need square footage.”
Wali said he’s already heard from tradespeople, including electricians and tile installers, interested in space at the outlet mall.
“They need a warehouse, but they don’t need to stack things 35 feet in the air, and they don’t need 25,000 square feet,” Wali said. “They need 5,000 square feet, and there aren’t many places that allow you to park trucks and have easy access to the whole valley.”
Housing isn’t likely, but Wali doesn’t rule it out. A development agreement for the outlet mall when it was built precludes housing, he said. There would also be zoning issues because of proximity to the Boise Airport, he said.
“But stranger things have happened,” he said.
Profitable outlet malls, Wali said, are owned by companies that have 10 or more of them across the country. Those companies already have relationships with retailers that use outlet malls, and it’s easier for those landlords to persuade a company to move into another one. When you only have one outlet mall, it’s hard to attract those companies, he said.
“You have to stop trying to force a square peg into a round hole and figure out what would work out there and go in that direction,” he said. “You’re not going to get national retailers to go there when there’s still space at The Village at Meridian.”
The $12 million outlet mall — built on 22.3 acres off Gowen Road and I-84 — opened the day after Thanksgiving in 1993 with great expectations. The Boise Towne Square Mall had opened five years earlierand retail was booming. Twenty-four businesses occupied 76,000 square feet.
S-Sixteen, an investment arm of the J.R. Simplot family, built the mall in partnership with Quality Centers, a Florida company that had built 14 other outlet malls, including one in Post Falls in North Idaho.
Sales were brisk. By the outlet mall’s first anniversary, 14 additional merchants had opened. The property, with five buildings, has 162,000 square feet.
The glitter didn’t last. A 1998 Idaho Statesman story described “five years of mediocre sales and crowds.” At the time, mall managers hoped the pending opening of a Coldwater Creek clothing store and the Idaho IceWorld ice skating rink next door would revitalize the outlet mall.
They didn’t. Within a decade, the store count had dropped to 27. By 2012, only 16 stores were operating.
Boise Factory Outlets no longer even has a website.
The outlet mall went through a series of owners. None was able to create a major retail destination.
S-Sixteen bought Quality Centers’ 50% interest in 1996 before selling to Portland-based Canterbury Real Estate Servicesfor $7.6 million in 2001.
Idaho Property Holdings, a company established to hold real estate investments for a Les Schwab profit-sharing retirement trust, owned the outlet mall property from 2008 to 2015, according to Ada County Assessor’s Office records.
WYSE Investment Services of Portland bought the outlet mall in 2015 and that year offered it for sale for $3.5 million.
VPS3 LLC, a Vancouver, Washington, company, bought Boise Outlets in January 2016 from a private lender who had foreclosed on the property. VPS3 is an affiliate of Colson and Colson Construction Co., of Salem, Oregon, which builds retirement communities.
Colson and Colson, the final owner before Gardner, was unsuccessful trying to lease out the open space.