Ground breaking at future San Jacinto Marketplace site
October 4, 2024
A groundbreaking is usually the first sign that construction on a development is about to happen. This has now occurred at the site of the future San Jacinto Marketplace.
Fidelis Realty Partners, accompanied by Baytown city officials, including Baytown Mayor Brandon Capetillo, celebrated the groundbreaking for the upcoming San Jacinto Marketplace property Wednesday morning.
“We have been faced with a number of challenges to bring this project to this point and we are thrilled to be moving forward with the redevelopment,” Alan Hassenflu, Fidelis CEO, said. “Fidelis enjoys being a partner of the Baytown community and looks forward to completing the redevelopment of San Jacinto Marketplace, bringing a variety of top-tier retailers to this city.”
Mayor Capetillo shared his excitement at finally having a groundbreaking ceremony for the long-awaited project.
“This is a proud moment for Baytown as we celebrate what will be the quality shopping experience residents have been waiting for,” Capetillo said. “While it has taken longer than any of us wanted, we are seeing real progress, and I can’t wait for our residents to see that the San Jacinto Marketplace was worth the wait.”
The site was where the former San Jacinto Mall resided. Fidelis purchased the mall in 2015 with plans to demolish and redevelop the old mall into a family-friendly, premier shopping destination, as it was in the past.
The new San Jacinto Marketplace will feature an open green area, referred to as Pelican Green, with patio restaurants where the community can congregate as well as several shopping and entertainment options in this inviting, spacious, and aesthetically pleasing environment.
Hassenflu said folks could start seeing some action in terms of construction commencement for the new marketplace in November, possibly in the first part of December.
“Maybe a little earlier, actually,” Hassenflu said. “So, it will be within the fourth quarter of this year when you will see all of the dirt starting to get moved and the bulldozers start rolling and all of the clearing of all of the site work on it.”
Hassenflu explained that they have to prepare the site first.
“This takes months and months,” he said. “This is a 105-acres site, so it’s a huge site. It will take months to scrape off the old parking lot, the asphalt, the lighting, all the way to the curb cuts, get it graded, and elevated to the proper massing. After that, all of the utilities go in.”
Hassenflu said everything people will see for at least the first six months will happen at the ground level or below ground.
“Beyond that, you will see the parking lot getting poured and the foundations getting laid,” he said. “Then, once the concrete foundations are laid and the parking lot is there, you start staging with the building materials to go vertical.”
Hassenflu said Fidelis is in negotiations with 10 major retailer leases at the moment.
“And the real question on everyone’s mind right now is tell us who you are working with?” Hassenflu said. “And we just cannot do it. We have agreements with these retailers, and until the lease is signed, we cannot announce it. We generally announce it in cooperation with the retailer. All 10 are being negotiated right now with the anticipation that all of the leases will be signed by the end of the year.”
Hassenflu referred to the retailers as “the usual suspects” that sell general merchandise, clothing for men and women, furniture, home accessories and books.
“And we’ll have plenty of food establishments, especially at the Pelican Green,” he said. “We’ll probably end up having about 20 restaurants in the whole shopping center.”
Hassenflu said he understood why some have expressed frustration about the length of time it has taken for a new marketplace to be built.
“Some of these large developments take a long time,” he said. “And this one has taken longer than most. We are in our ninth year of this deal.”
Hassenflu explained that Fidelis had to buy seven tracts of land since it first began the project.“Those seven tracts started with the first acquisition of the mall,” Hassenflu said.
The first acquisition measured about 40 acres, according to Hassenflu.
Acquisition No. 2 were the Mervyn’s and Service Merchandise facilities, Hassenflu said.
“Those were two separate tracts and were bought from separate owners,” he said. “So, those were No. 2 and No. 3 and we bought them in 2016.”
Hassenflu said in 2017, they purchased the land for the Marshalls store.
“It was their tract of land, and then they exited the mall in 2019,” Hassenflu said. “They still had a lease, and we bought it. They stayed there through 2019. So, by 2019, we had four of the seven tracts of land.”
Hassenflu said that, around 2018, they contracted to purchase the Sears facility.
“This was Tract No. 5 in 2018, and they shut down in 2019,” he said. “When we bought it, they mandated that it be kept open until 2019. Now, we had five of the seven tracts.”
In 2020, COVID-19 hit.
“Literally, from then through 2022, it was a three-year period of time when the retail business in America was in total disarray,” Hassenflu said. “Bankruptcies occurred on a pretty epic scale that hadn’t happened in a long time. And those bankruptcies were not Chapter 11. Most were Chapter 7 liquidations. When there’s liquidation, they do not stay around with their better stores and they just clean up the balance sheet and actually go out of business.”
Hassenflu said from 2020 to 2022, virtually no new development deals were done in America.
“Add to that the massive inflation that started to spike in 2022 and 2023, and that took off, reached over 9% in 2022 and continued into 2023,” he said. Hassenflu said some good news came along when JCPenney’s filed for bankruptcy. This opened the door for Fidelis to purchase JCPenney’s tract in 2021. After that, Hassenflu said Macy’s started to restructure.
“(Macy’s) did not go bankrupt. They never went bankrupt,” Hassenflu said. “When they became essentially the only merchant left at the mall, they said we are going to throw in the towel and sell it to you guys, too.”
Today, Hassenflu said Fidelis owns all seven tracts of land and all 105 acres.
“When we buy these tracts of land, we get rid of their restrictive covenants,” he said. “This allowed them to control our mall. We couldn’t do anything without their approval at that point. Until we bought their tract, they would not approve anything because it was their leverage to get more money out of us.”
In August 2022, Baytown city council approved a new 380 economic development agreement with Fidelis and returned $3.25 million to the city, which was part of a clawback provision in the initial contract. The agreement was that the developer would owe the city the money if a mall had not been developed by September 2020. Fidelis would also have been required to build a 1.2 million-square-foot indoor mall or 750,000 square feet of new retail space.
Capetillo said they now have a more performance-based and what he calls a sales tax incentive-based, where the “risk is more on Fidelis to perform.”
“The better they perform, the more they are rewarded,” Capetillo said. “We got to an agreement that was beneficial to both parties and beneficial to our citizens. That is where we are at today. I think very soon, we will see the outcome and the results of that agreement and the ability for private businesses, the market and the city to work through that.”
Hassenflu said he appreciated Baytown’s patience concerning the marketplace.
“And we appreciate the fact that you have supported us through your local representatives, and we are bound and determined, and filled with pride to give you the best project we possibly can and that you can be proud of,” Hassenflu said.