Northlake Mall sale remains uncertain, even as lawsuit against ex-tenant nears end

The timeline for selling financially troubled Northlake Mall remains uncertain but business at the north Charlotte shopping center is improving, lawyers working to sell the site told a judge Thursday.

It’s been nearly three years since the two-story, 1.1-million-square-foot mall fell into receivership after failing to pay its debts. Spinoso Real Estate Group of Syracuse, New York, maintains and operates the mall, and collects rent.

Last year, the mall was confronted by high-profile problems, from shootings to the exit of big retailers, such as Apple. The mall sued some tenants that left, like American Eagle, which is close to settling the case, according to Spinoso’s lawyers.

Citing occupancy rates, Spinoso attorney Melanie Johnson Raubach told N.C. Business Court superior court judge Adam Conrad that Northlake Mall is on a “positive trajectory.”

As of Dec. 31, Northlake’s occupancy held steady at 85%, including temporary leases, Raubach said. That’s just below the national mall occupancy average of 89%, according to Moody’s Analytics REIS data from last year.

Still, Northlake has seen year-to-year improvement. It was at 71% occupancy at the end of 2021 when Spinoso took over managing the mall, Raubach said, and 74% at the end of 2022.

“What we’re seeing with increased occupancy, with increased jobs, and keeping this mall functioning is exactly where we want it to be,” said Chris Fernandez, K&L Gates lawyer representing plaintiff Wilmington Trust National Association.

The next step, Raubach said, is to sell the mall. However, now is not the time, she said. “There’s an ongoing evaluation of all the factors,” Raubach said. “It is Spinoso’s opinion that this moment is not the time yet for Northlake.”

Some retail experts are skeptical about the mall’s future, saying the shopping center is in a “death spiral.” ”It’s going to be extremely difficult for Northlake to come out of this,” Queens University of Charlotte marketing professor Steven Cox told The Charlotte Observer in September

‘Do-or-die time’ for Northlake Mall after it sued stores that left following shootings

What happened at Northlake Mall?

The lender is relying on Spinoso’s expertise to time the market sales to get the best value, Fernandez said.

In November 2019, TM Northlake Mall — affiliated with Starwood Capital Group, which purchased the mall seven years ago — defaulted on its property loan and failed to make debt payments. Three other malls owned by Starwood in Florida, Michigan and Virginia, combined with Northlake, were issued loans for $725 million in fall 2014, documents show.

Spinoso lawyers said Thursday that one of those malls has been sold and the other three, including Northlake, will likely be sold individually rather than being listed on the market at the same time.

“There hasn’t been a decision on what property is next,” Fernandez said. “However if (a) buyer wanted a batch sale and economics were favorable, it would be considered.”

Back in August 2021, just three months after Spinoso was named a receiver, court records showed the mall was expected to be sold after its value had stabilized.

However, at the last status conference in June, Spinoso officials asked the court for up to nine months to stabilize the property and promote the mall’s increased security measures following three shooting incidents followed by several store closings.

Mall security concerns

During the pandemic, Northlake Mall also faced obstacles, including security issues and store closings.

Between December 2022 to February 2023, Northlake mall saw three shootings in less than three months, alarming shoppers, and store employees and owners. The high-profile Apple store abruptly closed March 1, followed by several other retailers including Buckle and American Eagle.

The mall added five measures to its security program, including gun sniffing dogs and license plate readers. All of those measures have been installed, Raubach said Thursday.

“The general feedback from tenants has since been good,” she said.

Last summer, Northlake Mall sued national apparel chain American Eagle in federal court, claiming the departure led to fewer shoppers, more stores leaving and a decrease in the mall’s value. The mall also is suing four other national retailers — Chico’s, Michael Kors, Soma and White House Black Market — claiming they still owe rent in Mecklenburg County Superior Court.

American Eagle countersued Northlake, citing safety concerns and calling the mall a “hotbed for crime.”

Spinoso and American Eagle are close to settling the case, Raubach said Thursday.

About Northlake mall

Northlake Mall is Charlotte’s youngest mall, opening in 2005. Investment firm Starwood Capital purchased the mall for $248 million in 2014 from original owner Taubman Center Inc.

The mall has 115 stores, according to its website, including department stores Belk, Dillard’s and Macy’s, and an AMC movie theater.

While several national chains have left, many locally-owned businesses have moved in, like Charlotte’s Nails, Alpha Dogz and Destination Sweets.

The mall is in north Charlotte off Harris Boulevard near Interstate 77.