Survival of the Fittest
- Feb 17, 2009
Once regarded as the center of community activity, the enclosed regional mall is, unfortunately, becoming the center of rising concern as it increasingly falls victim to today’s economic recession.To combat the harsh reality of record-level store closings that are driving mall vacancies up and asset values down, investor/owners are now being forced to rethink the future of the nation’s 2,000 enclosed regional malls, particularly those classified as “dead,” or centers with acres of undeveloped parking lots and underutilized land. Owner/investors are seeing that the same dicey economic environment, characterized in part by shifting demographics and a growing antipathy toward suburban sprawl, may cause developers to view malls not as large boxes that need to be filled but as land assets that can still serve as the centers of activity they were meant to be.But changing the paradigm from “filling the box” to “community center” among owners will not be easy. It will require considerable reinvestment and the addition of residential living, as well as commercial office space. Despite the challenges, though, retail investors see this all-in-one, “work, live and shop” regional community as a viable strategic option, especially when you consider that recent International Council of Shopping Centers findings show more renovation/expansions under way than new malls under construction. And to reclaim the lure of the community center, these renovations need to be interesting by encompassing a mixture of architectural and commercial diversity but at the same time to capture the look and feel of Main Street USA.Given the cost of land and the fact that older malls find themselves in prime locations owing to urban sprawl, this new community-asset perspective perfectly positions existing malls to become destination centers, a trend expected to continue and one that the savvy investor can’t afford to miss.