It was the end of an era when the Sears department store closed last year after nearly four decades at the Chapel Hills mall in Colorado Springs.
Now, it could be the end of the Sears building — and possibly the start of a major transformation at the mall.
Evergreen Devco, an Arizona-based real estate company, plans to purchase and demolish the two-story former Sears store at Chapel Hills, northeast of Academy and Briargate boulevards on the city’s north side.
In its place, Evergreen plans to develop a 300-unit, gated apartment complex on the 12.6-acre Sears site, which had anchored Chapel Hills’ west side since the mall opened in 1982.
Evergreen has contracted to buy the Sears property from current owner Northwood Investors, a global real estate investment and management firm with an office in Denver. The deal is scheduled to be completed in the fourth quarter, said Robert Place, Evergreen’s multifamily development director for Colorado.
Chapel Hills and The Citadel, Colorado Springs’ two enclosed shopping malls, are owned by New York-based Namdar Realty Group. But Namdar owns mostly interior portions of both malls; anchor spaces — including those for Sears, Macy’s, Dillard’s and J.C. Penney — are owned by the stores or third-party groups.
If Evergreen receives city regulatory approval for its project, it plans to begin construction immediately after it completes its purchase of the Sears property, Place said. The first renters could move into their apartments by fall 2021, he said.
Evergreen plans six, three-story buildings each with 36 apartments; three, three-story buildings with 24 units; and four, two-story buildings with three units, according to a proposal submitted to the city’s Land Use Review Division.
Amenities would include a clubhouse, fitness center and flexible indoor recreation space, along with an outdoor pool, shade structures and barbecue areas.
The apartments would be a mix of one-, two- and three-bedroom units that would rent at market rates. In the first quarter of this year, rents citywide averaged more than $1,200 a month, according to the Colorado Division of Housing and Apartment Association of Southern Colorado.
Evergreen believes there’s a significant need for housing on the north side that could be accommodated by more apartments, Place said.
“They’ve got heavy office employment,” he said.
“There’s a lot of retail in that immediate area, with very little rooftops. So we see that as an opportunity for us to meet the need for housing in the area.”
At the same time, an apartment project adjacent to Chapel Hills would help revitalize the shopping center by generating new customer traffic for the mall’s stores and restaurants, Place said. Malls nationwide have struggled for years as they’ve faced increased competition from newer retail centers, consumer shopping habits have changed and brick-and-mortar stores have closed.
The Sears at Chapel Hills shuttered in March 2019 as part of a wave of store closures over the past few years by the financially troubled national retail chain. A second Sears in Colorado Springs also closed last year at the Broadmoor Towne Center on the city’s south side.
Namdar, Chapel Hills’ owner, didn’t respond to questions from The Gazette about Evergreen’s proposal and its potential impact on the mall.
Founded in 1974 and with offices in Phoenix, Los Angeles, Denver and Utah, Evergreen develops retail, commercial and multifamily projects mostly in the Western U.S. and the Midwest, according to its website. The company also has asset management, property management and leasing services.
Evergreen is familiar with Colorado Springs; it developed a King Soopers-anchored shopping center at Marksheffel Road and Constitution Avenue that opened in 2017 on the city’s east edge.
Evergreen has looked for years to develop apartments in the Springs, Place said. As the city’s multifamily market has heated up to mirror a growing local economy, rents have climbed to record highs and vacancy rates have plunged, making the Springs more appealing to multifamily developers.
“We have looked at Colorado Springs repeatedly,” Place said. “It really is the rent growth that’s been established over the last couple of years that’s made it an attractive market. Three years ago we could not justify investing in the Colorado Springs market. Now, the circumstances have changed and it’s a very appealing marketplace for multifamily products.”