NORFOLK, Va. (WAVY) — MacArthur Center, the sprawling three-floor shopping mall in the heart of downtown Norfolk, is up for sale as part of the foreclosure process.

JLL Commercial Real Estate confirmed they are marketing the property at the direction of Wells Fargo Bank, which was appointed the special servicer when Starwood Retail Partners defaulted on their loan in 2019.

The 915,000-square-foot mall has faced declining foot traffic in recent years, mainly attributed to the overabundance of retail space in the region and competition from online shopping. It also has seen at least one tenant leave over safety concerns. Several shootings have occurred inside the mall.

Norfolk City Manager Chip Filer in a statement said the city is encouraged by the news a new owner could be found.

“We are hopeful that this move is the first step in reimagining the MacArthur Center property,” Filer said. “The City looks forward to working in partnership with any potential new owners should the property sell.”

A view of the interior of the mall on Black Friday 2022. (WAVY Photo/Brett Hall)

The mall has been a highly discussed topic in the city since one of three anchor tenants, Nordstrom, closed in 2019 after completing its one and only lease.

While Dillard’s and Regal Cinema remain, a slew of interior stores have closed in the last four years, including California Pizza Kitchen earlier this month. A marketing brochure put together by JLL said the total occupancy of the mall is 62.7%.

The mall first opened in 1999 on land leased from the Norfolk Redevelopment and Housing Authority. It was operated by Taubman until 2014 when Starwood purchased it for $265.5 million. It was bundled together with several other malls for a total $700 million loan.

Wells Fargo was appointed special servicer upon the default. For more than a year, the Spinoso Group out of Syracuse has been managing the property. Nick Egelanian, the founder of SiteWorks Retail Real Estate, said they will likely continue to manage the mall until a new owner comes in.

“The normal procedure is that eventually, the Special Servicer (a trustee for the CMBS lender who administers loans in default) gets around to selling the asset,” Egelanian said.

He said the sale will likely occur as an “auction of sorts” of with “qualified” buyers getting access to an offering statement for the property.

The current lease with NRHA runs through 2049, but an owner would have the purchase option beginning in 2029. A downtown plan for the city imagined a 2030 MacArthur Center broken up into different uses.

This is far from the first time this process has played out. Military Circle Mall and Chesapeake Square have already gone through the foreclosure process. Greenbrier Mall’s owners fell into foreclosure last year.

Keep up to date with the latest news on