The Utah Hockey Club bought The Shops at South Town and will build a practice and training facility … [+]
Utah Tech billionaires Ryan and Ashley Smith had to move at the speed of a hockey slapshot to buy the NHL’s Arizona Coyotes, relocate the team to Salt Lake City and then find a location for a practice training facility.
Smith Entertainment Group quickly found the location to build a new practice and training location at a 37-year-old shopping mall developer and owner Los Angeles-based Pacific Retail Capital Partners bought a decade ago and spent millions repositioning. The firm’s business plan to revive the moribund regional mall by creating flexibility for uses beyond retail proved to be a winner.
Last Friday, Salt Lake City’s newest professional sports franchise bought The Shops of South Town and its 111 acres in Sandy, about 18 miles south of Salt Lake City, capping a process that started in mid-May.
“It was lightning fast in this environment” with interest rates up and tight debt markets, says Oscar Parra, a principal in Pacific Retail Capital Partners.
The deal marks a rarity in real estate – a professional team buying an operating shopping mall to house its offices and a training facility. The training facility will be built next to the former Macy’s department store, which will be converted into offices. Delta Center will be the Utah Hockey Club’s home ice, sharing the arena with the NBA’s Utah Jazz owned by Smith Entertainment Group.
Sports Anchoring Other Development
For nearly two decades, new NFL stadiums, NBA arenas and MLB parks have been built as part of master plans that include hotels, apartments and restaurants. The MLB’s Atlanta Braves play in Truist Park next to The Battery Atlanta and Fiserv Forum, home court for the NBA’s Milwaukee Bucks, anchoring Deer District are among the many examples.
In July, St. Petersburg, Florida, approved a $1.3 billion stadium for the MLB’s Tampa Rays in the city’s downtown and will anchor billions more in mixed-use development. A year ago, Nashville, Tennessee, approved a new stadium for the NFL’s Tennessee Titans that, too, will anchor additional development.
The Shops of South Town may not be the last to blend hockey with a mix of development.
Local leaders in Alpharetta, Georgia, hope to win an NHL expansion team to rescue a floundering North Point Mall that insurance company New York Life took ownership of three years ago through a deed in lieu of foreclosure. The mall project, however, has competition from a master-planned project proposed about six miles away in neighboring Forsyth County that hopes to win an NHL expansion team.
Building a Sports Empire Quickly
The Smiths made their fortune selling a technology company they started with family members for $8 billion in 2018. At the end of 2020, Ryan and Ashely Smith bought the Utah Jazz and its home court Delta Center, roughly two months after reaching a purchase agreement.
About a year later, they bought Major League Soccer’s Real Salt Lake City with David Blitzer, whose pro sports ownership includes the NBA’s Philadelphia 76ers and the NHL’s New Jersey Devils. In January, they announced they were ready to bring an NHL expansion team to Utah.
“SEG envisions a near future where the NHL will thrive in Utah, and we are 100% focused on making this happen as soon as possible,” Ryan Smith said in the announcement.
Meanwhile, the Coyotes were struggling to build a much-needed new arena. The team was in its third Phoenix-area location since moving from Winnipeg in 1996 and couldn’t win public referendums for government money to build a new arena. Its last location – Mullett Arena on Arizona State University’s campus – seated only 5,000, the lowest in the NHL.
By March, the NHL convinced the Coyotes owner to sell, according to an ESPN report. League officials called Ryan Smith about buying the team rather than waiting for expansion. Smith assured the league a Utah team would be ready next year.
League owners approved the sale at an emergency April 18 meeting, setting in motion the hunt for a location for a practice and training facility.
“We brought them various options and put the deal together quickly,” says Brycen Woodley, a partner in Woodley Real Estate, which represented Smith Entertainment Group. “It was pretty stressful early on.”
Creating a Winning Property
Pacific Retail Capital Partners owns 24 malls and shopping centers around the U.S. It revives them by creating master plans that include converting some retail space to other uses.
“We view ourselves as clearing the path to development,” Parra says. “These malls need to evolve and probably have too much retail square footage to begin with.”
The firm does that by reworking the “reciprocal easement agreement.” Such agreements are common in commercial real estate. They allow different property owners and tenants to use common areas, roads and parking. But they also can restrict other uses.
For retail, that tends to mean nothing but retail. By editing those agreements, Parra says there could be other uses – such as apartments and sports facilities – that allow an organization like Smith Entertainment Group to begin work immediately.
Najla Kayyem, executive vice president of marketing for Pacific Retail Capital Partners, adds that “we want to have the ultimate flexibility for whoever our partner is to come and develop the highest and best use.”
They applied that approach to The Shops at South Town, a process made easier by the city. The mall sits within a masterplan Sandy drew up in 2015 dubbed The Cairns, which defines the city’s development path into 2035.
With South Town, Pacific Retail Capital Partners protected certain wings in the mall where it believed long-term retail belonged. It bought the closed Dillard store, renovated it and filled the space with Home Goods and Round1, a bowling and arcade concept.
But they took a different approach with the Macy’s store that closed in 2021 as part of a string of closures for the department store chain.
The firm filled the wing leading up to Macy’s with temporary tenants to maintain maximum flexibility. And they turned away possible tenants they didn’t believe were the highest and best use for the former Macy’s location.
Other times, Parra says the property wasn’t ready for immediate construction.
But with the hockey team, “everything was lined up so that when we got the phone call, it was easy to dive right into this,” Parra says. “It was pretty quick to get to the point of this is actionable dirt and let’s get going.”