Riverchase Galleria’s proposed $240 million redevelopment: What’s next for Alabama’s largest mall?

What’s next for the Riverchase Galleria?

Once Alabama’s premier retail destination, the Hoover shopping center is looking to stop a trend over the last decade of diminishing foot traffic, fewer retail tenants, and reduced revenue.

On Monday, the Hoover City Council got a peek at the results of a six-month feasibility study, which recommended a $240 million revamp which would demolish some big box anchor space, replacing it with apartments, single-floor retail and a performing arts center with up to 1,200 seats.

“There’s an opportunity to do something here that’s pretty neat,” said Steve Haemmerle, an executive vice president with Hunden Partners, the consultants who crafted the plan.

But the proposed fix will take more than just money.

As Haemmerle mentioned, the City of Hoover doesn’t own land at the Galleria. Any redevelopment would need the input of Brookfield Properties, its owner, and the retailers currently there.

It would also need developers willing to sink millions into the 39-year-old shopping center, which lies at the heart of Hoover geographically and, in a large part, historically.

Here’s a few takeaways from the study:

How we got here

When the Galleria opened in 1986, it had 1.2 million square feet of retail space, a 15-story hotel, and a 17-story office tower.

It is the state’s largest mall and was once one of the largest developments of its kind in the Southeast.

But the rise of online shopping, the dip in popularity for shopping malls, the rise of other retail developments, and a perception that the Galleria is unsafe have led to a 33% drop in foot traffic since 2019.

The Galleria was the scene of the Thanksgiving 2018 shooting that left 21-year-old Emantic F. “EJ” Bradford, Jr. dead, and a 2020 shootout that killed 8-year-old Royta Giles Jr.

Haemmerle said the Galleria simply has “too much retail space.”

What was recommended?

The proposed remedy would be a redevelopment in two phases.

The first would be a small-scale project calling for the demolition of the former Sears building, with construction of:

• 282 apartments

• 28,000 square feet of retail space

• 1,100-seat center for the arts as an anchor tenant

• 25,000-square-foot public plaza and greenspace

The second phase would call for the demolition of the current Macy’s box and adjacent triangular corridor of the mall.

Haemmerle said this was premised on Macy’s either closing or relocating to another location.

The Macy’s in the Galleria is the retail chain’s last in Alabama. In 2024, it hit the real estate market.

In its place would be built:

• 260 apartments

• 16,000 square feet of retail space

• 19,000-square-foot public plaza and greenspace

Haemmerle said there is little demand for hotel or office space currently in the market.

Offering ground-floor retail in a lifestyle center setting would reinvigorate the property, though it may “take a little bit of time to get off the ground.”

The difference would be apartments – “housing driven redevelopment” has seen success in similar redevelopment projects.

But the study stressed that it would need to be amenity-rich, high-quality apartments.

“There’s a real power to having a mix of uses,” he said.

Nick Faricy, a consultant with Hunden Partners, said the Birmingham area, like other metros in the Southeast, saw a lot of post-COVID apartment development in 2021 and 22, seeking to cash in on relocations among young professionals.

However, the market has slowed down since, resulting in a surplus. Vacancy rates in the Hoover market are showing as much as a 12.6% vacancy rate among apartment complexes, he said.

Much of those vacancies are in garden-style complexes built more than 20 years ago or more needing renovation, he said.

“High quality apartments are doing far better, performing exceptionally well,” he said.

What are the possible pitfalls?

The study pointed to a “financial feasibility gap” with the redevelopment.

Haemmerle said this was calculated assuming that a developer would expect a 16% rate of return on any investment.

The gap, he said, would be the amount of money that would be needed to induce investors.

Phase I of the project has a projected feasibility gap of $2 million, while Phase II had a $13 million gap.