MARY ESTHER — Within the next two years or so, an Atlanta-based developer proposes to demolish the old Belk department store space at the Santa Rosa Mall and build a 228-unit apartment complex in its place.
The estimated $37 million project, called “The Renaissance at Santa Rosa Town Center,” would consist of four freestanding, four-story apartment buildings, said Breck Kean, vice president of development for Rea Ventures Group of Atlanta.
The former Belk store on the northwest part of the mall closed in early 2014.
The 8.6-acre property for the proposed development is under contract. It is a joint venture between Rea Ventures Group and the mall’s owner, New York City-based Radiant Partners.
“We’re working to get all of the financing lined up that we’re pursuing, and it could be the third quarter of next year before we close,” Kean said. “The construction timeline is 12-18 months, so we’re at the end of 2019 or the first quarter of 2020 when this project is coming online” with initial occupancy.
The developer is seeking some project funding from the U.S. Department of Housing and Urban Development. And next spring, Mary Esther voters will be asked whether to allow the city to grant property tax exemptions that could benefit the multi-family development as well as other potential new businesses and expansions of existing businesses.
Rea Ventures officials outlined conceptual plans for their development at the Nov. 6 Mary Esther City Council meeting. At the same meeting, the council approved a resolution to place a referendum on the potential exemptions on the March 13 municipal election ballot.
“Should the referendum pass, the city will need to prepare an ordinance that would set forth the procedure and criteria for an applicant to request an exemption,” City Attorney Hayward Dykes said in a recent memo to City Manager Steve Holsinger.
Pending voter approval, the city’s authority to grant such exemptions could remain in effect for 10 years, according to city information.
Kean said zoning for the mall project site allows multi-family developments.
“We will have to get through the site-plan approval process, which could be initiated after the first of the year,” he said.
Holsinger said city staff and the local planning agency, which is made up of City Council members, will handle the initial review process. He said the developer’s full set of plans will be reviewed by Okaloosa County officials.
A tight market
According to information from Rea Ventures, the development would consist of 106 two-bedroom/two-bathroom apartments, 92 one-bedroom/one-bathroom units and 30 three-bedroom/two-bathroom units.
Rental rates have not been set yet, Kean said.
“Our strategy is to price the units below those of the newest apartment communities that have been developed in Navarre and Destin, and above existing older units in the Fort Walton Beach and Mary Esther market,” he said. “Our preliminary market study shows the vacancy rate of existing properties is less than 2 percent, so it’s a very tight housing market.
“And we have a significant location advantage. Our tenancy will be military contractors and other members of the military who have to travel 15 miles east or west to find housing.”
The study has found that the multi-family rental market in the Mary Esther area is “fairly limited” with only two communities built since 2010, according to company information. Also, Rea Ventures officials report that the study determined a demand of about 837 rental units over the next three years in this market area.
Kean said the construction of housing at older mall properties is becoming more common nationwide in light of various factors. For example, economists in recent years have reported huge upticks in online shopping as well as many customers choosing to shop more at stand-alone mom-and-pop businesses.
“With changes in the brick-and-mortar retail industry, you’re seeing the redevelopment of older malls across the country, and housing has been a very viable use for those redevelopments,” Kean said.
Santa Rosa Mall businesses “will be an amenity to the tenants” of the apartments, he said. “They’ll support the retail and (the businesses) will support us. It’s a win-win for us and the mall.”
Holsinger also has high hopes for the development.
“I think it’s an excellent proposal,” he said. “It’s really going to be beneficial to the area. Mary Esther is surrounded by military facilities, and I think maybe 80-90 percent of (residents in the city’s current housing stock) are military, ex-military or military support. There’s a need for housing in the transient market.”
Holsinger served as Mary Esther’s interim city manager from July until November 2016, and then returned to serve as city manager in early October. He has personal experience in dealing with the tight housing market.
Holsinger said that before moving back to the area from South Florida, he contacted a local large apartment complex where he had lived when he served as interim city manager.
“I didn’t hear back from them,” he said. “To me, that meant they had a waiting list. I ended up moving to the east end of Destin. It was the only available unit.”
He said the proposed development at the mall could be a catalyst for other redevelopment of the mall, as well as the overall commercial aspect of Mary Esther Boulevard.
“In Mary Esther, there’s not a large volume of available sites to build big projects,” Holsinger said. “So the mall offers that.”