Houston-based Hines is selling its last major retail property, the 3.8 million-sq.-ft. Dallas Galleria. The move comes more than two years after Hines sold its Houston Galleria to Urban Shopping Centers in November 1999.
The Dallas sale includes the 1.8-million-sq.-ft. Galleria mall, a 431-room Westin Hotel and Galleria North, a 112,000-sq.-ft. open-air lifestyle center. Houston-based Holliday Fenoglio Fowler is brokering the sale. Mall anchors include Nordstrom, Macy's, Saks Fifth Avenue and a three-level Gap superstore.
“Everyone assumed when we sold the Houston Galleria we were getting out of the shopping center business, but shortly thereafter we were in the throes of developing a huge mall in Barcelona. Are we getting out of the mall business? Clearly we pioneered that industry, at least in Texas, and there aren't a lot of opportunities anywhere in the U.S. where that hasn't been covered.”
Would Hines build or own another mall property? “Never say never, but realistically I think the sale of the Dallas Galleria should be seen as a strategic redeployment out of valuable retail into core office. Definitely Hines has become more of an office tower company in recent years,” says Lancaster. “We really shine where we can be the best in an area, and there are a lot of really good mall developers and operators, high end ones as well.”
Hines also felt that now was the best time to sell the Dallas property. “People are looking for quality assets and this is definitely about as good as you can get. It's a timing issue. We missed the market [to sell the Dallas property] when we sold the Houston Galleria, but now the timing has worked out.”
Lancaster says he wouldn't be surprised if a major mall REIT was a bidder.