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January 31, 2013

Charlotte puts vacant Eastland Mall on display

The city of Charlotte opened the doors to Eastland Mall Wednesday, giving developers a look at the ghostly remains of what was once 1.2 million square feet of prime retail space.

The city of Charlotte opened the doors to Eastland Mall Wednesday, giving developers a look at the ghostly remains of what was once 1.2 million square feet of prime retail space.

The city, which bought Eastland in August for $13.2 million, hopes to partner with a developer to transform the site, possibly into movie studios. Wednesday’s tour was an opportunity for developers to see whether the building could be saved or whether it would need to be demolished.

“We could use the food service area and maybe the theater,” said Steve Smith of SHM Partners of Los Angeles, who is part of a group that’s considering converting part of the mall into studios and sound stages. “The department stores might be used for offices.”

Other developers who came were skeptical of courting Hollywood, and thought the mall site could be remade into a more traditional development of offices and stores.

Wednesday’s tour for about two dozen developers began inside the space that once held women’s clothing store Modeline.

After a brief introduction, developers were allowed to walk through the section of the mall near the empty Burlington Coat Factory store and Dillard’s and the old ice skating rink, which had been converted to an indoor soccer field in the mall’s final years.

Store names such as Foot Locker were still in place over some retail spaces, many of which had been gutted of all furniture. Empty kiosks still stand in the mall’s walkways.

Eastland is seen as a linchpin to revitalizing east Charlotte because it occupies such a large footprint at Central Avenue and North Sharon Amity Road. City staff told developers it wants a “catalytic” development for the 80 acres it purchased.

Due to generous state tax credits, North Carolina has seen a boost in the number of movies and television shows shot here. “The Hunger Games” was recently filmed in the Charlotte area, and the Emmy-winning Showtime series “Homeland” is also filmed locally.

Will studios work?

In remaking Eastland, the city is hoping to capitalize on that wave.

The city has said it could help finance part of the project, possibly by paying to demolish the mall, if needed. But Peter Zeiler of the city’s economic development office warned developers that the city wouldn’t be taking the lead.

“Don’t ask for $150 million, or $300 million,” Zeiler said.

The city plans to ask developers to submit their qualifications for the project by Feb. 15. After creating a short list of qualified developers, the city will issue its Request for Proposals March 8.

It hopes to pick a developer by July 12. The city wants the winning developer to begin construction work within two years.

Some visitors were keen on the city’s idea for movie studios.

Bert Hesse of Charlotte, who is president of Los Angeles-based Central Avenue Pictures, believes the site is ripe to become a massive development with sound stages, an office park and a film school. He also said the site could house a museum for movies made in the state.

Unlike Smith of Los Angeles, who is considering keeping some of the mall, Hesse would demolish it.

“We aren’t interested in the building,” Hesse said.

He said his development would cost about $150 million. He said some public support would be necessary.

“No one will spend $150 million if there isn’t a feeling that the city wants to be in the film business,” he said.

Two studios, including ReelWorks of Charlotte, have told the city that local financial incentives would likely be necessary for the Eastland project. That would be in addition to the state continuing its generous tax credit program, they said.

Studios can receive tax credits worth 25 percent of their production expenses for shooting in the state. If a studio spends $75 million on a movie or TV series, it could receive $19 million back from the state.

But the tax credits have only been approved through 2015. It’s unclear if Gov. Pat McCrory and the General Assembly will continue them.

Other states have made large investments in courting the entertainment industry, including Louisiana, Georgia and Michigan. Michigan is a cautionary story of how movie business left when the state reduced its tax credits.

‘Less risk for taxpayers’

Monte Richey, president of Conformity Corp. in Charlotte, helped develop the Lowe’s store on South Boulevard on the edge of Dilworth. He is interested in Eastland, but not for the entertainment industry.

“I won’t condition my thought process around the legislature,” Richey said about the uncertainty of the tax credits.

He believes the city’s best opportunity is to tear down the mall and break up the 80 acres into small parcels. The city could lay down a grid of streets, he said.

“I’m a fan of incrementalism,” Richey said. “The city should break this down into a manageable size. It’s less risk for taxpayers.”

Rick Lazes of the ARK Group developed the N.C. Music Factory on the edge of uptown, as well as ReelWorks Studios, which is the city’s largest movie studio.

Lazes said he’s not interested in Eastland for a movie studio. He said he has a “very specific idea” for the mall but isn’t ready to discuss it publically.

Bob Silverman, founder and president of Atlanta-based Winter Properties, said his company specializes in “finding new uses for obsolete buildings.”

He asked the city a number of questions about the building’s condition, such as its HVAC systems.

He said he was encouraged that the mall was in good condition.

“Usually when I go into an old building I have to kick the rats away,” Silverman said.

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