EpiCentre’s tenant mix may put off some buyers

By: Payton Guion, staff writer February 7, 2014

CHARLOTTE – On paper, The EpiCentre looks like an ideal development. Well positioned, at a transit stop, a mix of uses and walkable.

The 305,147-square-foot nightlife hub in Uptown, on the 3.17-acre city block bound by College, Fourth and Trade streets and the Blue Line light rail, was listed for sale last month by the Dallas office of HFF Inc.

The complex, which is 94 percent occupied, bustles on weekends and during lunch, when the business crowd shows up, with a mix of tenants not found elsewhere in the city on a single property.

Where else in Charlotte can you ride a mechanical bull, cocktail in hand, immediately after leaving the gym and then pop into CVS Pharmacy to pick up a brace for the sprained wrist suffered when the bull bucked too hard?

But it’s that mix of tenants that may make it more difficult for HFF to line up a buyer, said Andy Misiaveg, a partner in the Charlotte office of The Shopping Center Group. As essentially a retail development that happens to have some office space, The EpiCentre doesn’t have what’s known as a core retail tenant to attract some of the well-endowed firms that would typically be interested in large retail properties, he said.

“It’s a struggle for some firms because there isn’t a huge credit tenant in the office or retail space” of The EpiCentre, Misiaveg said. “It all depends on the company’s investment parameters, but a credit anchor takes a lot of risk off the table.”

A credit tenant is a well-established and high-profile company that will not only take up a solid chunk of space, but also bring in customers and encourage other high-profile tenants to come to the property, like a Target. But, by design, The EpiCentre doesn’t have any such tenants, which Misiaveg said will make a difference in the kind of buyer the property attracts.

“It’s a little more complicated than trying to sell a strip (mall) anchored by a Harris Teeter out in the suburbs,” said Doug Stephan, a partner in Vision Ventures, which, in a joint venture, owns The EpiCentre.

The lack of what Misiaveg called a credit tenant isn’t to say that the property is without attractive anchor tenants. Gold’s Gym, CVS, Studio Movie Grill and Strike City bowling alley are all able to attract the customers and other tenants suited to The EpiCentre’s target demographic, said Andrew Jenkins, head of Charlotte-based Karnes Co., a commercial real estate analytics firm.

But Jenkins said the ancillary tenants – the restaurants and bars at The EpiCentre that have followed the anchor tenants – make an investment in the property somewhat riskier.

“Just the fact that it’s an entertainment complex means it has to be entertaining,” he said. “Restaurants have a lot of turnover and clubs are hot one day and not hot the next. If people stop coming, the retailers stop doing well.

“The challenge will be convincing someone to buy a big retail development, one that’s not your standard retail complex. Simon won’t buy it,” he said, referring to the Indianapolis-based real estate investment trust that owns Concord Mills and SouthPark Mall.

An asking price has not been established for The EpiCentre, but Mecklenburg County records value the buildings at nearly $72 million, and the raw land was sold in 2007 for more than $50 million, according to county tax records. Charlotte-based Vision Ventures has, as a part of the ownership group that also includes Mount Vernon Asset Management, spent upwards of $23 million on the property since buying it in 2012, Stephan said.

Of the property’s 305,147 square feet, retail constitutes 255,512 square feet and office space makes up 49,336 square feet, according to the listing. The complex, which was built in 2008, also has a 715-space parking deck.

According to the listing material, restaurants make up 70 percent of the rental revenue and generate $475 per square foot in sales. The EpiCentre has 16 restaurants, including Fleming’s Prime Steakhouse, Vida Mexican Cantina, Wild Wing Café, Jason’s Deli, Bubble Champagne Lounge and Howl at the Moon.

The EpiCentre listing wasn’t available on HFF’s website late last week, but Travis Anderson, managing director of the company, said it had not been sold.

Stephan said some companies have come forward and expressed interest in the property, but he said it’s so early in the process that none of the companies have had time to complete their due diligence.

Misiaveg said that despite the lack of a stellar anchor tenant and a fickle mix of other tenants, he doesn’t think the property will languish on the open market.

“There are a lot of people out there looking to invest institutional capital,” he said. “I expect it will be sold between 60 and 90 days.”

 

Original article appeared here.