K-Mart had terminated and closed its store on James Campbell Boulevard in Columbia, Tennessee, a town 45 minutes to the south of Nashville. The center, along with four others across the country, was owned by a private investment group out of New York and had been acquired back by the lender, GMAC. Although it was located in a good real estate location, the city of Columbia had experienced limited retail growth for a number of years. The center would have to be acquired with no executed tenant leases which made financing of the project challenging. Due to several planning and codes issues, the task would require cooperation from Columbia city officials in order to redevelop the center to its fullest potential. The center had been vacated for several years and was an eyesore to the residents of Columbia. City officials and residents wondered “why someone doesn’t do something with this property…bring us some new retailers into Columbia” was the common theme heard over and over.
Carl Storey served as a valuable member of the team. He successfully executed the acquisition and the rezoning of additional property needed for the development of a new Harris Teeter grocery store.
A full team approach would be required to combine BSM’s marketing, legal, construction and market skills in order to successfully redevelop the project. BSM Consulting reports indicated a substantial trade area existed for the city of Columbia and was an underserved retail market. The city should be able to attract national users to the market and to the project itself. The plan would require subdividing the building to allow for a multi-tenant use. Although BSM would have to close on the property without commitments, the company felt that the risk reward analysis indicated an appropriate use of company resources needed to successfully redevelop the property.
The capital markets group secured an acquisition and construction loan from a regional lender. An exhaustive financial analysis was completed for multiple scenarios that resulted in an optimum redevelopment strategy. Likely tenants that BSM felt should be in the market were identified. Our legal and marketing team helped the city of Columbia rewrite its parking and zoning codes which allowed for the redevelopment of a multi-tenant center. In March of 2006, the center held its grand opening with TJ Maxx, Ross, Office Depot and Rack Room Shoes. A new façade, parking and lighting sign package was completed and the center was totally transformed into something that the city of Columbia and its residents took pride in. BSM Investments realized a 45% return on its investment upon completion. The center was sold by BSM Properties to a 1031 exchange buyer in the summer of 2006 for a 7.2 cap rate. Retail sales from all the tenants remain healthy.