Author Topic: Mall landlords struggling to find takers at a price they値l accept  (Read 587 times)

rcjordan

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"I don稚 think anybody really anticipated the decline of the department store to happen as quickly as it did

https://www.bloomberg.com/news/articles/2018-06-12/owners-of-fading-malls-on-their-knees-as-buyer-pool-evaporates

Brad

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Re: Mall landlords struggling to find takers at a price they値l accept
« Reply #1 on: June 12, 2018, 05:47:14 PM »
There has been some experiments in converting large enclosed suburban malls to a mix of urban -like residential and retail.  Things like converting the empty department stores to condos or apartments and using big swaths of unused parking lots to make residential streets.  I don't know how successful that has been.

The smaller malls around here are slated for demolition.

Mackin USA

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Re: Mall landlords struggling to find takers at a price they値l accept
« Reply #2 on: June 12, 2018, 07:27:49 PM »
"Not long ago, some of the biggest names in private equity, such as KKR & Co. and Barry Sternlicht痴 Starwood Capital Group, were laying out substantial sums to snap up retail properties. In 2012 and 2013, Starwood purchased a combined $2.6 billion of malls from Westfield, followed less than a year later by a $1.4 billion deal to buy seven malls from Taubman Centers Inc. From 2012 to 2014, KKR bought four regional malls for about $502 million, Real Capital data show. That demand has all but evaporated as timing a wager on American malls becomes increasingly treacherous."

My field in Commercial Real Estate was Office Buildings.
https://www.bisnow.com/national/news/office/these-are-the-10-us-cities-with-most-vacant-office-space-54684#0
This January General Electric announced it would move its headquarters from Fairfield謡here it had been for almost 40 years葉o Boston's waterfront district. This is part of a larger trend: because of Connecticut's high business taxes, corporations are fleeing the suburbs for major metropolises, leaving Fairfield's offices largely empty.

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ergophobe

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Re: Mall landlords struggling to find takers at a price they値l accept
« Reply #3 on: June 13, 2018, 12:50:51 AM »
"I don稚 think anybody really anticipated the decline of the department store to happen as quickly as it did

I remember in the early 1990s, before Amazon was even a thing, reading articles about how retail space in the US was far above historical norms and far above countries of similar wealth/income. Whoever was writing those articles was all over that story... but I don't think anybody anticipated the decline would take as long as it did ;-)

Brad

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Re: Mall landlords struggling to find takers at a price they値l accept
« Reply #4 on: June 13, 2018, 02:51:58 AM »
>long

Part of this is our car culture.  We spent 100 years building everything to revolve around that car culture: suburbia, roads, along with malls and big box stores which can only survive in a high traffic automobile culture.  We keep building suburban sprawl, strip malls etc. because we don't know any other alternatives and change in retail is happening so fast we don't know what to build, so we keep doing what we are accustomed to and so things linger on in a half-life.

ergophobe

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Re: Mall landlords struggling to find takers at a price they値l accept
« Reply #5 on: June 13, 2018, 04:30:01 PM »
We spent 100 years building everything to revolve around that car culture

Are you familiar with the idea of "land banking"? I'm not sure I have the right terminology, but some urban planners and their cities have started building, say, parking garages that can be disassembled. The idea is to grab the land and put it to a use that a car culture wants/needs, but built so that if (and they say "when") car culture declines, that space has been "banked" so it can be used for something that makes sense 40 years from now (say, residential) rather than something that makes sense only now but would not be easy to convert (say commercial office space).

Brad

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Re: Mall landlords struggling to find takers at a price they値l accept
« Reply #6 on: June 13, 2018, 05:08:57 PM »
>landbanking

To far advanced for around here. The Midwest is always 10 - 15 years behind The Coasts.  We just keep  doing what we did in the 1970's because nobody really gets it yet here.

Yes we do some landbanking: rails to trails to keep those abandoned ROW open but only because their was Federal money to do it,  things like that.

ergophobe

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Re: Mall landlords struggling to find takers at a price they値l accept
« Reply #7 on: June 13, 2018, 06:10:49 PM »
Actually, I think the first land bank was in Cleveland or somewhere like that. The Midwest has been dealing with what to do with spaces created due to "deindustrialization" for a long time.

What they may be slow to see in the Midwest is the end of car culture and that the same land banking ideas may need to be applied to shopping malls and vacant lots in downtowns.

I have to say, I remember my first extended stay in Grand Rapids (two weeks in 1998) and I was so surprised that there was so much in walking distance (1.5 mile radius) of where I was - shops, restaurants, grocery stores, big box stores, bookstores and for two weeks I walked everywhere and *never* encountered anyone on the sidewalks except one guy who looked homeless. I have been going back to Grand Rapids every two years for 20 years now (will be there in about three weeks) and I have seen a *little* change, but very little.

This compared to my five years in Madison, WI, where huge numbers of people go everywhere on bike and foot. I knew professional people who didn't own a car. One friend lost his job and he was so anti-car, he was biking seven miles to the airport with his interview suit in his bike panniers and then biking home... at midnight... in February, when the forecast was for 0F/-20C

All that to say that I think GR is going to have a tougher time with the death of the mall than Madison will (though Madison is anchored on three sides by three big malls - East Towne Mall, West Town Mall and South Towne Mall. Or at least it was 20 years ago).
« Last Edit: June 13, 2018, 06:13:15 PM by ergophobe »

rcjordan

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Re: Mall landlords struggling to find takers at a price they値l accept
« Reply #8 on: June 13, 2018, 07:17:28 PM »
>going to have a tougher time with the death of the mall

I think deeply rural areas will be forced to maintain a car culture for a decade or more longer than the urban areas. Hubs with malls or strips that serve them might hang on for a while until drone deliveries to our doorsteps finish them off.  We have plenty of small communities settlements wide spots in the road where residents have to drive 20+ miles for a convenience store and 30+ miles for a grocery store.  I've read of families in Montana who carpool to go to the grocery store 200 miles away.

My hometown is one of these hubs --even so, there are plenty of landlords struggling to fill storefronts.


rcjordan

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Re: Mall landlords struggling to find takers at a price they値l accept
« Reply #10 on: June 13, 2018, 10:42:01 PM »
>strongtowns

"major problem with dying shopping malls: crime"

This brings up another couple of advantage of online shopping.  Patron safety (and their physical accessibility) isn't a cost factor online. It's HUGE in malls, big in strips, and significant in individual stores.  But that advantage likely pales when compared to the big one; shoplifting.  One local Ace Hardware franchise told me that shoplifting was the real culprit behind why they shut down.

Quote
By taking all the standard business activity in a city shopping for clothes and household products, getting a haircut, etc. and moving them to the edge of town in areas built for and only accessible by car, we have robbed our communities of wealth. We inverted the standard design of cities that has been in place for centuries in which the necessities of daily life are located in the middle of town, accessible by the maximum amount of people who can take a simple walk to fulfill their basic needs.

Under that model, the closure of a few shops would merely mean that a storefront was now available for another business. Because traditional main street-type stores were built in a way that could accommodate many different sorts of businesses on a modest scale, a former tailor's shop could fairly easily be converted into a tavern and the available space would be seen be hundreds of passersby on a daily basis.

Part of that is the rise of car culture, as Brad pointed out.  But I think returning to "shops in a row on a busy city street" isn't going to be the solution, either.  --The drones are coming.

Brad

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Re: Mall landlords struggling to find takers at a price they値l accept
« Reply #11 on: June 14, 2018, 12:03:26 AM »
>shops in a row

I think you are right.  You need a mix of restaurants and bars (nightlife) with some truly unique small retail shops mixed in.  The kind of retail are shops that people travel out of their way to visit because of WOM recommendations.  It could be handcrafted wares, local artisinal stuff, niche store that knows their niche better than anybody, but they need  to be really unique.  This way they reinforce each other, people coming out of their way to see a retail store are likely to stop for lunch at a neighboring restaurant.   

Part of the problem with department stores, big boxes and mall stores is they are all selling pretty much the same stuff all made somewhere in the third world.  The jeans at Macy's aren't that much better than Sears or Walmart. All the goods are coming off the same ships just different containers and labels.  So for the consumer they can order the exact same thing from Amazon with half the hassle why not?

Mackin USA

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ergophobe

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Re: Mall landlords struggling to find takers at a price they値l accept
« Reply #13 on: June 14, 2018, 04:19:42 PM »
I FEAR

Well... the parking garage example is simply a case of building something useful today, but building it in a manner that it can be used for something else later without massive cost. It's more a matter of keeping options open while it's still possible.

martinibuster

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Re: Mall landlords struggling to find takers at a price they値l accept
« Reply #14 on: June 14, 2018, 07:17:46 PM »
My local mall has added a bowling alley with a bar in it. That complements the movie theater nicely. A live theater stage would be a great addition. For seeing drama/musicals as well as live music.