A plan to remake the old Kmart site at Elmwood Shopping Center has finally reached the starting blocks, eight years after the discount department store chain held its last Blue Light Special.

Developer Louis Lauricella, whose family first opened the outdoor mall in 1975, has proposed a $120 million project to build 251 apartments, as well as shops and restaurants, at the site. Lauricella is partnering with New Orleans firm Felicity Property on the apartment building. On Thursday, they secured preliminary approval from Jefferson Parish for a property tax break to help fund the development.

The move is part of the ongoing transformation of Elmwood, a traditional outdoor strip mall that Lauricella began updating a decade ago. His aim has been to convert Elmwood into a space that caters to evolving consumer tastes for “experiential” gathering places, which include residential, restaurants, entertainment and more upscale retail stores.

“As we have master-planned the shopping center, the natural evolution is to ‘densify’ it and add pieces where folks can gather and make memories,” said Will Place, director of development at Lauricella Land.

New consumer tastes

The trend has been seen at other metro area shopping centers, with the transformation of the old Clearview mall into ‘Clearview City Center,’ which now has a large Ochsner medical facility, a 270-unit apartment complex called The Metro, and plans to convert the center of the mall into an open air entertainment space.

Another struggling indoor mall, Riverwalk Outlets in downtown New Orleans, won approval last year from the City Council to raise $25 million in new sales taxes to develop Spanish Plaza into a restaurant and entertainment hub in order to attract shoppers.

While Lauricella has expanded and diversified Elmwood since the mid-1990s, the latest transformation has been more radical.

In 2018, the Jefferson Parish Council approved the creation of the Elmwood Economic Development District to direct sales tax for infrastructure improvements, such as road, pavement and landscape upgrades. At the time, Lauricella envisioned 500 new apartments atop 85,000 square feet of ground-floor retail space.

That has been scaled back to the 251 unit complex, which will be called The Francis, and 64,000 square feet of retail space.

The long delay in putting the development together was due to several factors, including the disruption of the COVID-19 pandemic and the subsequent surge in the cost of building materials. But it was mainly because of the negotiating tactics of hedge fund operator Eddie Lampert, whose strategy when buying and shutting Sears, Kmart and other declining store chains was to sit on the properties and demand a payout from landlords to relinquish the leases.

Lauricella was finally able buy out the lease from Lampert three years ago, paying a reported $12 million, according to real estate sources.

“Getting rid of Kmart was the catalyst,” Place said.

The Francis apartment complex will be looking to attract young professionals and others moving to Jefferson Parish to work in its expanding healthcare sector, in corporate headquarters that have relocated there from Orleans Parish, and other growing sectors like film and graphics, said Patrick Schindler, president of Felicity Property. It will include a pool, a gym, shared work space and a residents’ library.

“As we design these three buildings, we’re creating a kind of traditional Main Street through sideways, architecture and landscaping,” Schindler said. “Residents will be able to walk from their doorsteps to shopping and restaurants.”

As stores like Kmart and Michael’s, the craft supplies chain, have left Elmwood, they have been replaced with a new Nike store, Banana Republic, J. Crew Factory and branches of local restaurant chains, Boulevard American Bistro and Byblos Mediterranean Grill.

Place said the aim is to continue to attract a mix of factory and full line retailers and local restaurant outlets.

Tax breaks

On Thursday, the Jefferson Parish Economic Development Commission gave its preliminary approval to negotiate a payment in lieu of taxes, or PILOT, for the project. Any property tax break would eventually require approval from the Jefferson Parish Council.

“This is a project that we really want to see in Jefferson Parish, so I anticipate this process is going to play out with support from the council and the business community,” said Jerry Bologna, JEDCO executive director, after Thursday’s meeting.

Jefferson Parish has given tax subsidy support to other large projects, particularly the various expansions of medical facilities, which is an economic priority for the parish. An economic development district was created, for example, for Ochsner’s $360 million Jefferson Highway Campus to subsidize road and other infrastructure improvements.

Shopping malls traditionally have been a big source of jobs and taxes for the parish. JEDCO estimates that the retail trade in the parish employs more than 22,000, making it the second-largest sector for employment after healthcare.

“At a time, nationally, when shopping malls have been distressed in many areas, this is an opportunity to attract more investment,” said Bologna. “We want to make sure we keep our shopping areas as strong as possible and this has the added benefit of creating more housing options in Jefferson Parish.”