When it brokered the sale of the Galleria Mall retail center in June of this year, Oxford Companies hit an impressive milestone: The deal’s sales price stood at $18.35 million. At $33.4 million an acre, this sale represents one of the richest land deals in Ann Arbor’s history.
Galleria Mall, located near the University of Michigan’s central campus, has since 1988 served as the home for several Ann Arbor businesses, including the beloved Pinball Pete’s Arcade. That arcade has found a new home not far from the Galleria location.
What led to this retail center fetching such a large price? Andy Selinger, chief investment officer of Oxford Companies, said that the retail center’s site represents one of the last prime sites near the University of Michigan that can be used for new student housing.
Because of that, the land on which the Galleria Mall stood saw its value rise during the last several years.
“This property is on South University Avenue, basically the main street of Ann Arbor serving the University of Michigan,” Selinger said. “It is the epicenter of where University of Michigan students congregate.”
An affiliate of Landmark Properties, one of the busiest student housing developers in the country, purchased the mall property. Landmark plans to demolish the Galleria and build a 17-story development with apartment units and ground-floor retail.
This will be Landmark’s third high-rise residential building in Ann Arbor. Oxford Companies represented the seller of the retail center, Galleria Associates LLC.
Selinger said that the demand for modern student housing near the University of Michigan has skyrocketed during the last 15 years. During this time, Ann Arbor has seen 14 high-rises rise near the university, all providing housing for students.
Even with this new supply, though, the demand for new multifamily properties here – such as the project that Landmark will soon begin developing – is still outpacing the number of units available.
That’s largely because the student enrollment at the University of Michigan continues to grow.
“I’d say that those 14 high-rises in the last 10 to 15 years are maybe helping Ann Arbor keep up with the growth of the University of Michigan’s student enrollment,” Selinger said. “More likely, though, they have not. More likely, we still need more student housing to meet the demand.”
Selinger said that the addition of more student housing also helps meet the overall demand for new multifamily housing in the Ann Arbor market. Yes, these new projects, including Landmark’s, are built for students. But as Selinger says, any new housing is a positive when the Ann Arbor region, and the entire country, needs so many more housing units.
“We do need more affordable housing in Ann Arbor,” Selinger said. “That is true. But we also need more of all housing types. Anytime that we can add to the housing stock here in any way, that is good for the city of Ann Arbor.”
And what of the Galleria? Selinger said that the property has always been a strong retailer performer, routinely attracting tenants. This is despite the property’s unusual architecture style and the fact that though the Galleria is old it is not historic.
As Selinger says, no one will lament the disappearance of the property, especially once the modern high-rise apartment project being undertaken by Landmark Properties is complete.
“I think everyone will be happy with the new building,” Selinger said. “We are not losing anything of historic value by demolishing the Galleria. The new multifamily building won’t be a luxury property. But it will be a strong example of quality, amenity-rich urban student housing.”
