May 26, 2021

Kitsap Mall bound for foreclosure

Photo by JLL [enlarge]

The 36-year-old mall appears headed for new ownership, and possible changes of use.

Back in 2013, Starwood Capital Group and an affiliate paid Macerich and a pension fund about $127 million for Kitsap Mall, at 10315 Silverdale Way N.W., and some neighboring retail. Part of that deal included a nearly $77 million loan from Royal Bank of Scotland (or RBS). Anchor tenant Sears closed in 2019, and other big-box retailers there have been struggling, even before the pandemic.

Now the 62-acre Silverdale property, with about 761,639 square feet in eight buildings, is headed for a foreclosure sale on Aug. 27, at the Kitsap County Administration Building.

Current tenants include Macy's, Cost Plus World Market, Dick's Sporting Goods and Kohl's. JLL brokers the space.

CRE Direct reported two years ago that the mall's collateral value was then worth less than its original loan, now owned by US Bank. County records indicate that Starwood is now about $9 million in arrears.

Update: Capital Pacific said after deadline that it had brokered the separate January sales of Starwood’s two satellite retail properties next to the main mall. Those traded to a Texas investor group for a combined $17.5 million.

North Point at Kitsap is north across the street, at 3108 N.W. Randall Way. Tenants in those four buildings include La-Z-Boy Furniture Galleries, Snap Fitness and Applebee’s.

Kitsap Place is east of the mall, at 10300 Silverdale Way N.W. That appears to be home to Michaels, TJ Maxx, Dollar Tree and others. The latter two satellites traded for $16 million in 2013, on top of the $111 million for the main mall property.

Starwood puts them all under the same umbrella, totaling 966,000 square feet. It says there are 100 stores, with 3,700 surface parking stalls. The Kitsap Daily News said in 2013 that the main mall dates to 1985, and was developed by Safeco arm Winmar.

Starwood's property is ringed by other separately owned retail including Costco, Safeway, Goodwill and Best Buy. St. Michael Medical Center is also a near neighbor.

Nationally, some big box stores are being converted to fulfillment centers for Amazon and others. Other old malls and retail centers are being redeveloped for housing, though that potential generally depends on transit connections and overall walkability.