NORFOLK, Va. (WAVY) — The City of Norfolk will soon control all of MacArthur Center as negotiations are now underway for the city to purchase the mall’s remaining anchor store: Dillard’s.
Wednesday, the Norfolk Economic Development Authority voted unanimously to set aside no more than $4 million for the purchase of the 250,000 square foot, three-floor store. The exact price will be determined in negotiations led by the city’s Director of Economic Development Sean Washington.
The purchase comes exactly five weeks after the city set aside $18 million to buy the mall interior out of receivership.
Washington said it was important for the city to gain control over the whole mall. It would allow the city to steer the conversation on redevelopment.
What isn’t known for certain is how long Dillard’s will remain.
Dillard’s opened with much fanfare along the mall in 1999. It has been the Arkansas-based upscale department store’s largest location in Virginia. The store employs an in-house tailor and includes a salon and spa on the second floor.
The city’s most recent assessment of the building is $8.7 million, a decrease of $7.4 million from the prior year.
The loss of Dillard’s value is less than half of the mall’s decline. From 2022 to 2023 the mall lost more than $26 million in assessed value.
While the mall has continued to lose value and tenants the last five years, Dillard’s operations remained mostly unchanged, until an announcement late last month. Dillard’s announced they would be converting the store to one of their clearance center models.
This transition includes closing off the second and third floors, stocking the first floor with clearance merchandise from full-line Dillard’s locations in the region and selling it for “deeply discounted prices.”
While a spokesperson said “many factors” played a role in their decision to make the change, a retail expert said this could also be the precursor to a full closure. Dillard’s is known for owning their properties, and do own the land and building at their three other Hampton Roads locations.
Washington said the city approached Dillard’s last month to let them know of the city’s intentions to buy the interior of the struggling mall. During that conversation, Washington said they also asked about Dillard’s long-term plans.
“The question was asked about the opportunity to purchase and they said there is a willingness to do so.” Washington said.
Washington said the retailer didn’t indicate whether or not they would stay as a tenant of the EDA. A spokesperson for Dillard’s didn’t immediately return request for comment.
The Dillard’s won’t stay with the EDA, Washington said. They already own and are in the process of demolishing Military Circle Mall.
Instead they will transfer the Dillard’s building to the city, which last night voted to acquire all the land the mall and two anchor stores sit on. The Norfolk Redevelopment and Housing Authority had owned the more than 21-acre-site for the mall’s nearly 25-year history, and held the long-term ground lease with mall developers.
The city anticipates they would see an additional $9.9 million in revenue this coming year because of their purchase of MacArthur Center. At this point there are no solid plans to redevelop the mall.