Local developer buys Crossroads

Omaha's Crossroads Mall is about to receive a serious effort at improvement from a high-powered and well-heeled Omaha developer.

Friday, longtime Omaha developer Frank Krejci closed a deal to buy the faltering 50-year-old mall, and his representative touted the property's potential to transform into a major redevelopment offering a mix of retail, office and other uses.

Krejci's most recognizable project is Oak View Mall, but beyond that he has been a quiet driver behind a series of retail projects, office centers and housing subdivisions.

What more Crossroads could become is an open question.

In recent weeks, Crossroads has drawn “intense interest” from businesses who want to locate to the 72nd and Dodge site, said Jay Lerner, whose Omaha real estate firm the Lerner Co. was hired to handle the sale and to manage the property,

Lerner said the redevelopment of Crossroads will begin by engaging interested parties and prospective users, then seeing how they might fit into an overall plan. Lerner specifically mentioned looking at the addition of medical and educational options and the opportunity for a full-service hotel.

“Those are things that haven't been pursued, but will be,” Lerner told The World-Herald.

At the same time, Lerner said, details about any future project will need to be worked out with numerous parties already involved with the site, including mall anchors Target and Sears.

Although he cautioned that redeveloping the property will take time, Lerner said the Crossroads location is of major importance to the city's future and a prime site for redevelopment.

“Frank is uniquely qualified with the ability, experience and resources to undertake a project of this magnitude and of such civic importance,” Lerner said.

Krejci's next steps will be closely watched by city leaders and a community eager to see the corner return to prominence.

“The neighborhood is ready for reinvestment in the area,” said City Councilman Pete Festersen, who represents the Crossroads area. “So the sooner, the better.”

The City of Omaha is one party ready to sign on to a redevelopment.

Omaha Planning Director Rick Cunningham said the city will invite Krejci to a discussion about turning the property into a vibrant, densely-developed mix of retail stores, offices and housing. Cunningham said the city is willing to consider property tax incentives to encourage redevelopment.

“There has been a vision created for 72nd and Dodge,” he said, “and the Planning Department is going to work diligently to bring that vision into being.”

Crossroads, which opened in 1960 and once was the city's leading shopping center, has been in a long slide as Omaha's population patterns and shopping choices shifted to the suburbs. Crossroads lost tenants — its occupancy rate sunk as low as 50 percent — and saw its enclosed style left behind by a trend toward outdoor shopping centers.

The problems culminated when owner Simon Property Group of Indianapolis defaulted on its mortgage and lost the property at auction in March to its lender, CWCapital of Washington D.C.

After that, some 38 prospects inquired about the property, and more than a half-dozen made offers.
The offer from Krejci, president and CEO of Century Development Co., won out, but how much he paid was not released. Although CWCapital paid $40.6 million to claim the property, the resale was expected to bring in far less.

Krejci offers a “masterful” track record and personal financial strength that should help minimize the effect of the current tight lending conditions for commercial developments, said Jerry Slusky, an Omaha commercial real estate attorney.

“In his hands, the city of Omaha has got a great asset,” Slusky said of Crossroads. “It's going to go from a negative to a positive.”

Krejci bought his first parcel of real estate in 1950. In 1960, he developed his first subdivision, Greenbrier in Elkhorn, and his career real estate transactions total more than 40,000 acres.

His retail projects include La Vista's Brentwood Square, Hillsborough Plaza, the Nebraska Crossing Outlet Mall and sites in Arizona. He was one of the local developers working with Simon Property on Oak View Mall.

His office projects include Centech Business Park, Pacific Springs, buildings in the Old Mill and North Park office parks and restoration of the Blackstone Hotel.

Krejci's residential projects include Waterloo's West Shores lakefront housing subdivision, Piedmont, Trailridge Ranches, Elk Ranch Estates, Bent Tree, Whispering Oaks, Hidden Hills and others in Arizona.

Krejci's retail projects reflect a more traditional style, not the trendy outdoor centers like west Omaha's Village Pointe or Papillion's Shadow Lake Towne Center. But in keeping Lerner as property manager, Krejci has an assistant who drove Shadow Lake's development.

City and civic leaders mention Shadow Lake, Village Pointe, Midtown Crossing and Aksarben Village as models for Crossroads' future. In 2004, the urban design initiative Omaha By Design even sketched a future 72nd and Dodge with a civic square, mid-rise offices and retail stores.

Reality will be more complicated.

Target bought its piece of the property when it built in 2006. Sears owns its building and holds a long-term lease on the ground beneath it.

“It's a challenging piece of property, but I know people are creative,” said Connie Spellman, Omaha By Design's director. “If they've got the right vision and resources, wonderful things can happen.”

Although the property suffered under Simon, local real estate officials say it is in an excellent location to succeed. The 72nd and Dodge intersection is Omaha's second busiest, with more than 100,000 cars driving by every day. Affluent neighborhoods are close by.

The area within three miles of Crossroads has the city's highest density of rooftops and daytime population, said Barry Zoob, a vice president at Omaha's Grubb & Ellis Pacific Realty.

“It's the center of town. It's always been the center of town. It's Dodge Street. It's a phenomenal redevelopment opportunity.”

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