Westgate Mall in Bethlehem sold to N.J. real estate investment firm
The only constant lately in the retail world is change.
So, here’s yet another development: The Westgate Mall in Bethlehem has changed hands.
Karen Pittari, Westgate’s vice president of marketing, confirmed the mall was sold Wednesday to Onyx Equities, a Woodbridge, N.J., real estate investment and property services firm that specializes in acquiring and managing commercial properties. Onyx has several retail properties across New York City, New Jersey and Philadelphia.
“They are well-positioned to service this area, and they’re going to do a great job,” Pittari said. She said she did not know the sale price. Onyx officials did not return attempts to contact them.
It’s not clear what Onyx’s plans are for the 45-year-old shopping mall, but a glance at the company’s website shows it has a practice of pumping millions into underperforming commercial properties, especially in its office segment. On the retail side, Onyx earlier this year announced a capital improvement plan for the Woodbridge Crossing shopping center in New Jersey, a renovation that includes parking, signage and facade improvements.
Investment is something the Westgate Mall could use. Most recently, the 270,000-square-foot shopping center lost its largest tenant: Bon-Ton, the department store chain that wrapped up its liquidation at the end of August. The exit of the chain has left huge gaps at shopping centers across 23 states, especially crippling for secondary malls such as Westgate, given the lengthy process to replace a longtime anchor that took up more than 100,000 square feet.
The 10-acre Bon-Ton site at Westgate Mall has many redevelopment options, including mixed-use, retail or medical, the mall’s previous leasing agent told The Morning Call earlier this year. The former Bon-Ton is just one piece of the more than 20 acres of prime real estate the mall offers near Route 378, adjacent to Lehigh Valley Health Network-Muhlenberg.
Bethlehem Mayor Robert Donchez said he looks forward to sitting down with the new owner to review any plans they have to redevelop the property, which he said has big potential.
“It’s valuable property, important to the city and Lehigh County,” Donchez said. “It has high visibility and easy access.”
The entrance of Onyx represents the second time Westgate Mall has changed hands over the last five years.
Property records show Mark Pepitone’s City View Capital LLC bought a portion of the mall — a 10.4-acre section that includes most of the shopping center, including the Weis Markets space — for $2.3 million in June 2013. In December 2014, Pepitone’s Willow Investment LLC bought the 10-acre pad underlying the Bon-Ton store for $3.85 million from Pennsylvania Real Estate Investment Trust.
Then, in summer 2015, Pepitone detailed to The Morning Call a plan for the sleepy mall to undergo a $5 million makeover, aimed at recapturing the buzz of when the retail center opened in the early 1970s. The renovation, which included plans for a fresh facade, marked the first major project at the mall since Pepitone took it over.
Under his ownership, the mall also landed a tenant offering the kind of recreational amusement many shopping centers desire nowadays. That tenant, SkyZone, allows toddlers and adults to have fun on wall-to-wall trampolines, play dodgeball and slam dunk a basketball.
Pepitone also was poised to get a small sliver of the City Revitalization and Improvement Zone tax incentive to redevelop the shuttered Dempsey’s restaurant at the mall.
But the CRIZ award, which was never finalized, does not transfer with the sale of the property, city officials said.
The deal means a new chapter in Westgate Mall’s interesting history is right around the corner.
It’s a history that includes a presidential campaign stop from the late John McCain in 2008, in which the candidate walked around the mall’s supermarket, smiled and shook hands.
It’s also a history that includes a Lehigh Valley example of a deal’s a deal.
In that case, Westgate owner Harold Campbell was negotiating to get Allentown department store chain Hess’s to open a store at his new shopping center. While Hess’s preferred to own the real estate under its stores, Campbell wanted to keep the mall’s land together. So, the two sides reached a deal on a 30-year ground lease that included an option for Hess’s to buy the 10 acres occupied by its department store for $500,000 once the lease expired.
When it came time to cash in, however, Hess’s was no longer around. The fixed-rate purchase option eventually ended up in the hands of PREIT, which, after a lengthy court battle, bought the parcel for $500,000 in July 2005. Almost a decade later, PREIT unloaded the site to Pepitone’s company for $3.85 million.
LET’S MAKE A DEAL
The Westgate Mall deal is just the latest mall transaction in the area in recent years. Here’s a summary of the activity:
January 2013: PREIT sells the 577,000-square-foot Phillipsburg Mall in Warren County, N.J., to Mason Asset Management for $11.5 million.
June 2014: PREIT sells the 406,000-square-foot South Mall in Salisbury Township to a group of seven New York-area investors for $23.6 million.
December 2014: PREIT sells its 50 percent interest in the Whitehall Mall to Washington Prime Group. The Whitehall Mall share was packaged with two smaller commercial properties for a total sale price of $25 million.
February 2016: PREIT sells the 457,000-square-foot Palmer Park Mall in Palmer Township to Cityview Commercial LLC for $18 million.
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