Memphis Shelby, Tennesee
Sparking the Revival of a Dying Mall
Global Storage Partners specializes in identifying and transforming underutilized properties into successful self-storage facilities and commercial centers. Memphis, Tennessee – a city rich in cultural and historical significance – serves as the backdrop for just one of our most transformative projects, Global Memphis Shelby, LLC. Memphis, known worldwide as the home of Elvis Presley’s Graceland, boasts a unique blend of musical heritage and southern charm. However, like many urban centers, Memphis has faced challenges characteristic of suburban sprawl. This is the kind of environment where we can make impactful investments and put our well-honed process into motion.
As Americans relocate throughout the country and small businesses seek cost-effective warehousing, these facilities meet the growing demand for storage solutions while serving as catalysts for further economic development. By revitalizing these properties, we foster vibrant ecosystems that attract nationally established businesses and services, contributing to the overall revitalization of the area.
In the following case study, we describe the journey of renovating part of a dying mall in Memphis into a modern multi-use commercial center. We present the history of the mall’s decline, the strategies employed, and the positive impact our investment has had on the community.
Opened in 1968, Southland Mall was a hub of commercial activity.
The Changing Needs of Shoppers
Our Memphis-Shelby property is situated in the Whitehaven neighborhood, located in the southwestern corner of Shelby County, Tennessee. Historically, Memphis began as an unincorporated city with a patchwork of farms and an early hub for agricultural distributions. Eventually, it grew into an urban center with sprawling residential suburbs that boomed between 1950 and 1960 due to annexation. To address the needs of the Whitehaven community the Southland Mall opened in 1966. It was the first enclosed mall of the mid-South and featured world-class art installations alongside well-known stores of the time, such as F.W. Woolworths and Walgreens.
With the popularity of shopping centers like the Southland Mall, malls cropped up all over the United States during the 80s and 90s. However, local economies could only support so much retail space ultimately resulting in vacancy challenges. The problem was exacerbated during the 2008 recession as consumerism slowed and aging retail buildings became less attractive to the general populace, falling victim to the rise of internet shopping.
Modern location-based consumer preferences have shifted towards spending on experiences such as dining, travel, and entertainment. Younger generations, such as Millennials and Gen Z, prefer bespoke and engaging activities over conventional shopping.
Technological advancements, particularly the rise of e-commerce and BOPIS (Buy Online, Pickup In Store), have dramatically changed consumer behavior. Online shopping platforms like Amazon and Temu provide convenience, competitive pricing, and a vast product selection that traditional brick-and-mortar establishments struggle to match. This shift has led to a decline in foot traffic in many older malls anchored by department stores, which no longer align with current consumer desires.
In the case of the Southland Mall, in its prime it had capacity for 60 stores, with Macy’s and Sears as its anchors. However, in 2015 the Macy's closed, followed shortly by Sears in 2018, as both anchors shuttered as part of nation-wide downsizing.
A sign of changing consumer behavior, Sears closes stores across the country.
Death of the Mall
As time passed the needs of shoppers across America changed, and the Southland Mall was another casualty of the significant shifts in shopping habits. Besides more general causation such as the changing interests of those with buying power and e-commerce, two other key factors contributed to the Southland Mall’s erosion: mall specialization and the evolving layout of retail spaces.
Mall Specialization Trends
Modern malls have gravitated towards two distinct types: discount and premium. Discount malls, featuring stores like TJ Maxx, Target, and Ross Dress for Less resemble today’s outlet malls, offering budget-friendly options. On the other hand, premium malls house higher-end retailers such as Nordstrom, Bloomingdale’s, and Neiman Marcus. This shift towards specialization has led to the closure of over 3,000 Sears stores and a similar fate for many Macy’s locations.[5][6]
Mall Retail Layout Trends
The layout and design of malls have evolved significantly to accommodate the desires of modern generations. Today's thriving malls offer open, communal spaces that blend shopping, dining, and entertainment, with easy transportation access. Unlike the 50s-style layout of the Southland Mall, which connected two premium retailers through a single corridor with specialty retail shops, modern malls cater to the desire for a destination experience. Patrons now seek a place where they can shop, eat, and walk around in a vibrant, engaging environment.
The Southland Mall’s downfall came with the turn over of brand name stores, such as Singer and Levys, which were replaced by smaller, unknown retailers that did not have the same recognition with shoppers. Successful malls often feature four to five major retailers alongside a variety of recognized shops, food options, entertainment, and utility services.
These factors were key to how Global Storage Partners approached this project. The redevelopment plan for the Southland Mall addressed these changes by integrating specialty retail, dining options, and utility. Our methods align with the evolving trends of the community, making this highly visible section of the mall a functional and attractive destination for today’s shoppers.
Finding Opportunity in Commercial Real Estate
Despite the closures of Sears and Macys, we still saw value in this location. Situated at the intersection of Elvis Presley Boulevard and Shelby Drive, two major thoroughfares, the daily vehicular traffic pattern was still very high with an average of 26,196 AADT (Annual Average Daily Traffic) as of 2019. The property sat on approximately 14.3 acres, which was more than what was needed for self-storage, allowing for additional commercial parcels to be sold and developed for other uses.
The owner and seller of the property was Transformco, which was formed by billionaire Eddie Lampert, the former CEO of Sears. Much of Sears national retail footprint had been inherited following the company's bankruptcy. Negotiations with Transformco proved challenging, though not enough to deter us from our vision.
Conceptually, we had to craft a development plan that would maximize the utility of the property and project a glowing sense of commerce and pride. The multiple developmental stages could offer much-needed opportunities for local job creation along the way. Additionally, with the positive locational characteristics, we envisioned a complete make-over for this section of an aging mall while seeking quality co-uses to complete the conversion project.
Execution of a Self-Storage Conversion
The transformation of a nearly sixty-year-old building into a state-of-the-art self-storage facility involved addressing several aging infrastructure issues. The building required extensive work on its sewage, HVAC, electrical, plumbing, and roofing systems – all of which were outdated and in poor condition. The initial phase of the project included the demolition of unusable parts of the structure and the certified removal of just under 5000 square feet (or roughly the size of a basketball court) of hazardous materials to ensure safety compliance.
Smart planning was crucial to balance the property's uses effectively. The former Sears building was strategically converted into a self-storage facility. New walls were constructed to redefine the building’s layout while attempting to salvage as much of the original building as possible to cut down on the environmental impact and the need for virgin materials. Partnering with Public Storage as the operating manager, one of the largest public storage companies renowned for its reputation and execution in the industry, was a pivotal move to ensure the project's prosperity.
The Results of a Self Storage Investment Fund
The total property purchased was approximately 14.3 acres and was subdivided into five parcels. The first parcel, still under ownership, was converted into a self-storage facility. Four additional parcels were created and sold for a dynamic mix of retail, food, and utility, thus maximizing profits.
- Parcel 1: The main Sears building was converted into a 104,873 square foot indoor climate-controlled self-storage facility hosting 1,358 storage units. The second floor of the building was also developed to expand the self-storage capacity, adding significant value to the property.
- Parcel 2: The former 10,000 square foot Sears Auto Center was sold to Marketplace Development and redeveloped into a Starbucks and Auto Zone. So far, these establishments (including the Public Storage) have created approximately 30 jobs in the community, with more on the way.
- Parcel 3: This parcel was sold to Carolina Ventures, a franchisee and developer, and the site will be developed into a Guthrie’s Chicken restaurant and new car wash.
- Parcels 4 and 5: These parcels were sold to Shelby County to build a County Health Clinic serving the neighborhood with resources such as family planning, lead testing, and general wellness exams.
The strategic subdivision and sale of these parcels was a direct catalyst for the revitalization of the area which brought in new businesses and services. This comprehensive redevelopment project showcases a forward-thinking approach to transforming underutilized properties into valuable community assets.
Public Storage and Guthries are just two of the businesses that have opened on the created parcels.
An Impressive Outcome for Alternative Investors
The Global Memphis-Shelby conversion has been a resounding success. Purchased for $3 million, the strategic sale of four parcels generated $3,551,000, covering the initial investment and providing additional capital while retaining the former Sears building, which continues to generate positive cash flow. The collaboration with Public Storage and comprehensive upgrades to the building’s infrastructure underscore the strategic approach taken to ensure long-term profit and sustainability.
This transformation stands as a testament to innovative and sustainable redevelopment. By preserving existing structures and safely removing hazardous materials, the project minimized environmental impact and significantly reduced energy consumption compared to new construction.
The redevelopment has revitalized the neighborhood, enhancing property values and stimulating local economic activity. New automotive, dining, and community services have breathed new life into the area, making the mall a vibrant destination for residents and visitors alike.
Executing on our business objectives, we were able to maximize benefits for investors, partners, communities, and the environment by finding the best use for existing buildings and adjacent sites. While the commercial real estate market may seem tumultuous, investing in storage units remains a lucrative venture for experienced real estate fund managers.
Trust Global Storage Partners to transform underutilized spaces into thriving community hubs - where your investment in self-storage conversions drives both economic and environmental success.
To learn more or inquire about investing, contact our SVP of Capital Markets.
