Norfolk in ‘early negotiations’ with Pharrell’s development team to revitalize Military Circle mall, officials say

The city of Norfolk has entered into negotiations with a development team that includes musician Pharrell Williams to revitalize Military Circle mall, city officials said Friday, though they stopped short of announcing the group as the winning bidder.

Norfolk City Manager Chip Filer said officials are in “early negotiations” with the development team pitching Wellness Circle, a $1.1 billion proposal that includes plans for a 200-room hotel, more than 1,100 new housing units and a 16,000-seat arena to replace Military Circle mall.

In addition to Williams, who grew up in Virginia Beach, the development team includes Virginia Beach-based Venture Realty Group and California arena management company Oak View Group, among others.

Filer said the city’s negotiations have so far focused on the financial aspects of the arena component of the plan. City officials have already ruled out the possibility of bringing a professional sports team to Norfolk, meaning it would primarily feature live music and entertainment events, Filer said.

The arena is estimated to cost $288 million, according to Wellness Circle’s financial plan.

It would be funded in part by a 2% increase in Norfolk’s citywide hotel tax and calls for the city to pay for nearly all of the arena’s parking infrastructure. It also calls for the creation of a “municipal arena authority” to help finance the construction.

But the finer details, including the arena’s financing, are likely to change as negotiations continue, Filer said.

“Council has a preference towards what Wellness Circle is proposing. What we have to do now is figure out if we can make this financially feasible,” Filer said. “It’s very possible that, by the time we’re done doing our due diligence, council may say, ‘you know what, we aren’t going get there on an arena.’”

Wellness Circle is one of three development teams who were selected as finalists for the redevelopment of Military Circle Mall in 2021. Each of the three proposals would remake the mall site with entertainment destinations, a hotel, office space, parks and hundreds of new homes.

Some of the development teams recently raised concerns about the city’s lengthy selection process, calling it “unusual.”

Mayor Kenny Alexander said Friday that City Council has not officially awarded the job to Wellness Circle yet, and that council is still considering all of its options.

“There are three proposals out there and we’re discussing all three. Until we actually vote on something, the process is still open,” Alexander said. “We have no deal. We have no ordinance. We’ve got a long way to go.”

Alexander said in a previous interview that council members were still examining each proposal to determine which — if any — is a good fit for Norfolk. Who pays for things like public parking spaces, environmental work, stormwater management and the demolition of the mall are all questions that need to be addressed before they move forward, he said.

“They’re expecting you to be happy about a shiny project. Well, I’m not happy about just getting a shiny project. I want a shiny project that I can pay for, and that’s profitable for the city,” Alexander said.

Some other council members have also expressed reservations about the potential cost of the redevelopment. Councilman Tommy Smigiel said in a previous interview that council has been reluctant to select any project that could require a citywide tax increase or a major public investment.

“I think it’s been the general consensus and expectation from City Council that the developer, whoever is chosen, would have to bring some significant capital to the table of their own investment,” Smigiel said.

“I just don’t think that there’s an appetite on council to stomach a huge expense.”

Daniel Berti, daniel.berti@virginiamedia.com