City of Orem Looking Forward to $500M Capital Investment

After two and a half years of planning and development, the $500-million redevelopment of the 112-acre University Mall site in Orem is officially under way.

A favorable 4-3 vote before Thanksgiving by the Alpine School District gave Woodbury Corporation the final Community Development Project Area Plan (CDA) approval it needed to take University Place, a mixed-use, walkable development along the University Parkway, from the drawing board to reality.

The other taxing entities involved, such as Orem City, Utah County, the Central Utah Water Conservancy District and Orem Metropolitan Water District, had previously approved the CDA, which will provide the company with post-performance tax increment financing of $51.5 million to aid the redevelopment of infrastructure, buildings and other necessities within the University Mall site.

Malls across the nation are changing and the University Mall is no different. With the internet altering how people shop and the way retail stores function, malls need to reinvent themselves, says Kathy Olson, director of development. Woodbury Corporation built the University Mall in 1972 and it has been a retail center for more than four decades, generating about 25 percent of the Orem City's sales tax revenue.

The University Mall lost two of its major tenants a little more than two years ago when Nordstrom left and Mervyns closed. Since then Woodbury Corporation has been working on a new development plan.

"The Woodburys want to make sure the mall stays vibrant," she explains. "One way malls are doing that is to bring in residential and office buildings to help increase the amount of traffic in the area. The retail becomes more attractive because of the increased foot traffic from the park, the office and the residential, and the office buildings become more attractive because of all the surrounding restaurants and amenities."

Without the CDA, Orem Mayor Richard Brunst says Woodbury Corporation was only willing to reinvest $183 million in the mall, but with the CDA the company committed $510 million. "The mall is worth $130 million right now. We are talking about the mall expanding by three to four times. That is unheard of," he adds. "I appreciate the Woodbury Corporation having enough confidence in the City of Orem to make this kind of investment. Every community is interested in building economic vitality. In effect, for every two jobs that go into the mall another job will be created in our community. And for every dollar that is produced in new revenue in the mall, 43 cents of additional revenue will be produced in the community. For the Woodburys to put this kind of money in our city, this is huge."

University Place has been called "a destination place" and "Utah Valley's version of City Creek." Whatever the description, it will be a vibrant development with amenities that include 1.5 million square feet of retail surrounded by 700,000-square-feet of Class-A office space, a two-acre civic plaza and park, an outdoor music venue, a swim and tennis club, a 120-room hotel, a cinema and 1,200 residential units – all within a walkable development.

Plans call for the demolition of the space vacated by Mervyns and a portion of the mall just to the south of it. What remains of the mall will become an indoor retail Main Street, while an outdoor Main Street will be constructed on the north side, according to Olson.

Retailers will benefit by having an additional 3,500 office workers close by and another 1,200 residents within walking distance of the mall. RC Willey plans to open its second largest store in the old Nordstrom location in April. Cinemark is planning to expand with a 9,000-square-foot XD theater to open in late spring. Meanwhile, new stores that opened this fall include Charming Charlie, Torrid, Melty Way, Pizza Studio and Costa Vida. Additional stores coming in the spring include Chipotle Mexican Grill, Potbelly and Visionworks, along with a relocation of Starbucks to enable it to have a drive-up window.

At full build-out, Woodbury Corp. expects the development will create about $6.5 million in annual property tax revenue. The University Mall currently pays about $1.6 million per year in property taxes. During the 20-year period of the CDA, the taxing agencies will receive about double the property tax revenue they currently receive from the mall, according to Mayor Brunst.

Olson says the redevelopment will take place in phases. Phase one is currently under construction now. It includes 238 first-class residential units that will be available at the end of 2015 or first quarter of 2016. For the residential development, Woodbury Corporation has partnered with Ivory Homes and its multifamily entity, ICO, to build and manage a portion of the residential development.

Future residential phases will include town houses and possibly condos and senior housing, however, the financing market is not currently favorable to condos.

Given that more millennials want to live, work and play in urban centers, University Place is coming at an opportune time. And with bus rapid transit in the works by the Utah Transit Authority, the development should be beneficial to students and employees at BYU and Utah Valley University.

Construction of 100,000 square feet of Class-A office space will begin in January at the corner of University Parkway and State Street. The building will include 25,000 square feet of retail space on the main floor. Okland Construction will be the general contractor.

Olson says Orem's lack of Class-A office space has cost the city jobs. "In the last two years Orem has lost more than 2,000 jobs because companies that grew up in the city didn't have any Class-A office space they could move into, so they went elsewhere. Our development will help solve that problem," she continues.

Mayor Brunst confirms the loss of 2,000 jobs. "We have watched companies like Xactware Solutions Inc., Omniture (now Adobe) and dōTERRA grow up in Orem and move elsewhere. We were really sorry to lose them. AtTask is the same way. We have had many businesses start here and we want to keep them here," he says. "We are trying to ensure we do have the office space for businesses that grow up here and the Class-A office space built by Woodbury Corporation will certainly help. We are the number one incubators of new businesses in Utah Valley."

Other phases of University Place will be built as the market demands. Olson says office and retail tenants will be announced as leases are signed. Ultimately, absorption will determine the speed in which new buildings will be added.

The new civic plaza, park and music venue will be focal points for what is hoped to become Orem's new town center. According to Olson, the park will have a full time programming director who will arrange activities such as yoga classes, concerts, art fairs and old movies in the park. Events such as a big Christmas tree lighting, pumpkin-carving and Easter egg hunts have also been discussed. "We are investing to ensure the park turns into a downtown gathering place for the City of Orem," she adds.

City Manager Jamie Davidson says University Place represents a giant step forward in the City of Orem's efforts to ensure that the community remains an attractive, vibrant and progressive part of Utah's landscape. "The city looks forward to the redevelopment of the University Mall campus and Woodbury Corporation's plans to ensure that Orem remains the county's commercial center with a wide variety of needed Class-A office space, regionally-significant retail and highly-amenitized residential housing," Davidson adds.