The man who bought and plans to remake Eastland Mall has been called a "King of Class B real estate."
For nearly 20 years, Andrew Segal has scooped up second-tier office buildings.
He advertised rent prices on billboards, which is unusual. He offered short, two-page contracts. And he began targeting small businesses that relied on the Internet and cell phones. They didn't need secretaries, and therefore not a lot of space.
He tried to make leasing offices as simple as renting a car.
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"There was a market for small tenants and entrepreneurs," said Segal, the president of Houston-based Boxer Property. "The rest of the office market didn't know how to deal with these people. It was confusing to deal with someone who didn't have a broker."
Segal is a relative newcomer to retail properties. He now faces a steep challenge: Reinventing Eastland Mall, which closed last week after 35 years in business.
For $2 million, Segal bought the 512,000- square-foot main section of Eastland plus roughly 30 acres of land around it. He doesn't own the four empty anchor stores, which could make redeveloping the mall more difficult.
The sale price is remarkably low, considering the mall's history. In 1998, Glimcher Realty Trust of Ohio bought the same piece of Eastland for $54 million.
Segal said he first walked through Eastland about six months ago. He bought a pair of sneakers on his fact-finding trip.
His business partner, Jim Neil, chief executive of Dallas-based Churchill Capital, said the seller, Florida-based LNR, first told Boxer it would sell Eastland for roughly $6 million.
"We thought it was interesting, and easy to pass on," Neil said. "Then there was a number that was close to the $2 million. We thought long and hard about that, and then passed."
Boxer Property - which owns roughly 8 million square feet of real estate and manages about 5 million nationwide - closed on Eastland last week.
Segal said local investors were too turned off by a drumbeat of negative media coverage.
"The joke is that I could walk into a restaurant in Manhattan and tell them about Eastland and get 10 or 15 people who would do the deal," said Segal, 43. "I could do the same thing in the backyard of Eastland - and no one would be interested."
He looks for deals
Immediately after finishing law school at New York University in 1992, Segal jumped into the real estate business, not bothering to take the bar exam. Armed with $1 million of his mother's divorce settlement - he coaxed her for the start-up money - he moved to Dallas.
Texas, still hung-over from the mid-1980s oil bust, was ripe with good deals, he thought.
His first deal was for an office building that had been empty for seven years, for $1.1 million. It had been built for $12 million more than a decade earlier, for Mobil Oil.
"I knew a broker's name in Dallas, that's it," Segal said. "I lived in a $19-a-night hotel room. My first car cost $275. We did it on a shoestring."
The deal was successful. Segal then bought more property - in Houston, Dallas, Tulsa, Okla., and Baltimore. He avoided buildings with structural or environmental problems. His main criterion was that the buildings were "underutilized," which could mean they are old or in a neighborhood or part of downtown no longer desirable.
Boxer Property's efforts to demystify office leasing - and to drive down prices - tweaked competitors.
A Baltimore Sun story in the late 1990s, written as Segal bought 750,000 square feet of Class B office space downtown, quoted a Dallas competitor as saying Segal wasn't a "fun guy to have in the market."
Boxer Property dealt almost exclusively in office buildings until it bought and renovated a failed mall in Fort Worth, Texas.
Boxer bought the mall and the anchor stores for about $14 a square foot in 2005. (By contrast, it bought Eastland for $3.90 a square foot, though Boxer doesn't control the anchor stores.) It spent about $30 million reinventing the mall, which became La Gran Plaza, targeted to Hispanic shoppers.
Segal tried to make the mall a hybrid, with some destination stores and others for daily shopping.
"There is a supermarket, there are offices, there are hair salons," Segal said. "Those are everyday things. And there is a country-western themed nightclub, and a movie theater. On the weekend, these things draw a very wide circle, from all over the Metroplex."
The city of Fort Worth agreed to give La Gran Plaza up to $21.8 million in property and sales tax rebates over the next 20 years if the mall meets sales goals.
The city has said the mall is a success.
"I don't think malls are dead; I think malls are changing," said Joel Kotkin, a futurist who writes about America's changing demographics and who is a Segal friend. "In upper-middle-class areas, they are becoming lifestyle centers with restaurants and movies. And in ethnic areas, they have an ethnic focus."
Kotkin said Hispanic shoppers have different tastes and shopping habits than African-Americans or whites. One difference, Kotkin said, is that Hispanics will visit the grocery store more frequently.
An on-site grocery store was a key part of La Gran Plaza. Segal has told the city of Charlotte he plans to include a grocery store at Eastland.
Said Kotkin: "What Andrew does is, he takes the space and Hispanicizes it."
Fort Mill plaza
Segal has said he might transform Eastland into a Hispanic-themed mall, like his Fort Worth project. He said the site could also be redeveloped into something else, like an outdoor, walkable community of homes, shops and offices, if the city partnered with him and had a different vision.
Segal said malls can still act as community centers, which was their original intent four decades ago.
Boxer Property last year became the manager of Plaza Fiesta Carolinas in Fort Mill, S.C. Plaza Fiesta Carolinas is marketed to Hispanics, with the Spanish-themed name and internal "street names" in Spanish.
Some employees wish Boxer would do more to market the indoor shopping center.
"I don't see any advertising anywhere," said Mauricio Valencia, who works at La Pobinata Market, a Hispanic grocery store. "It's deserted. We don't get people coming."
Abel Ramirez, who owns a store that sells sports jerseys, said the previous management company had more festivals, such as Cinco de Mayo. He said there may be an upcoming Colombian festival, but that Boxer needs to do more.
Segal said that at his Fort Worth shopping mall, Boxer spent heavily on promotions.
Last week Segal said he wants the city to partner with him to redevelop the site, possibly by buying the empty anchor stores. That could cost as much as $15 million, based on previous negotiations the city had with the owners, which include Dillard's and Belk.
Some City Council members said they are open to the idea, though they said they haven't talked with Boxer Property yet.
Neil, Segall's business partner, said the low purchase price will give Boxer time to develop Eastland correctly. There is little pressure for Boxer to act quickly, Neil said.
"It was important to get Eastland at a low price because we don't control the whole thing," Neil said. "We buy things that are unorthodox. We try to keep our capital structure as conservative as possible."