Vacancy Filled: Former Dillard's space at mall snapped up by property developer
Oct. 19—HARLINGEN — The huge and very empty Dillard's space at Valle Vista mall has been sold to a property developer for an undisclosed sum.
Selling the 106,000-square-foot mall space is a major coup for the mall owners, Kohan Retail Investment Group, since the Dillard's space amounts to about one-seventh of the square footage of the entire mall.
The buyers are the development firm BH Properties, a major real estate player with more than 800 tenants at its properties nationwide. It has offices in Los Angeles, Phoenix and Dallas.
So just what's going to go in there?
"They haven't told us specifically, but typically what they do when they buy distressed properties, they convert them into retail or mixed use," Raudel Garza, executive director of the Harlingen Economic Development Corp., said Monday. "That's what they're probably going to do, either split it up into smaller retail or do something a little bit different, and bring in some other uses. And the other uses would probably be some kind of office space."
The acquisition of the property at Valle Vista mall is the second major acquisition BH Properties has made in Harlingen. Previously, they purchased an 80,000-square-foot warehouse from Valley Baptist Medical Center near Ed Carey Drive and Glasscock Avenue, Garza said.
"BH Properties, we met them several years ago at on of the trade shows we attend where we had a booth, and we talked to them about Harlingen and they liked the market," said Garza, who added the HEDC played no official role in brokering the Dillard's space mall deal. "They liked what they were hearing, and because of that I think, they continue to monitor some of the properties. And like I said, they've got two very large properties that they've bought here in Harlingen."
The Dillard's at Valle Vista was downgraded from a full-spectrum department store into a Dillard's Clearance Center in 2018. In June, it was closed for good.
"Retail buildings such as the former Dillard's are eyed by investors for a variety of purposes, including continued retail use, repurposing and redevelopment, conversion to entertainment venues and other needs for a brick-and-mortar location," said Daniel Galvan, principal broker at Coldwell Banker Commercial Rio Grande Valley, which handled the Dillard's site sale.
In 2018, Kohan Retail Investment Group of New York bought the 651,000-square-foot Valle Vista for $12.5 million after the property was turned back over to lenders by Washington Prime Group in 2017, who cited as a reason that profits were not meeting expectations.
Valle Vista opened in 1983.
The owners of the mall filled one major vacancy created by the closing of the Sears store at the mall by selling it to a Dallas-based developer in 2020.
The fast-growing business services firm TaskUs also bought space in the mall.
"Actually the mall owner was in town just a couple weeks ago looking at the mall and some other properties, other opportunities," Garza said. "He's very interested in trying to make sure that we get a good product mix, a good tenant mix. He's not just selling it to whomever, he's picking some very good, qualified buyers."
"We're in contact with both of the developers that bought the buildings, and we're trying to make sure that when they get a bite and they need some help, maybe to push something over the edge in decision-making, we're going to try to help out with that, too," Garza added.
In the Rio Grande Valley, BH Properties owns a three-building site in Hidalgo and a 185,499-square-foot warehouse and food distribution facility in Donna. The latter facility currently is occupied by the Packing Corporation of America, according to the company's website.
BH Properties did not respond to an email seeking comment on their purchase of the Valle Vista property.
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