Mon 25 May, 2009
Dead Malls: Suburban Planning Nightmare or Opportunity?
Filed under: Economic Development, General, PlanningTags: Dead Malls, Redevelopment, Shopping Centers
The enclosed shopping mall, an uniquely American retail innovation, was the “future of retail” in the 1950s and 60s. Shopping centers became an icon of suburban living in the 1970s and 80s, before beginning their slowly accelerating decline in the 1990s. Today, the growing number of dead or dying shopping malls and centers are seen as symbols of the downside of “suburban sprawl.”
One example of this pattern is the Plaza Pasadena shopping center, an enclosed mall established originally as the cornerstone of an urban revitalization effort in Pasadena, California. See “A Case Study in Successful Failure” for more on the birth, life, death, and future of this mall.
From a planning perspective, local communities can no longer assume that shopping centers will…
…remain static tax revenue generators into the distant future. James Kunstler, observer and acerbic critic of the American suburban landscape, referred to the shopping mall as a type of “disposable” architecture. What was once (only a generation ago!) the future of retail is now looking more like future brownfield redevelopment opportunities (such under-performing malls are often referred to as “grayfield” sites). As noted in a recent Wall Street Journal article (excerpted below):
Recession Turns Malls Into Ghost Towns
By Kris Hudson and Vanessa O’Connell
As the recession alters American spending habits, traditional shopping malls…are deteriorating at an accelerating pace.
With their maze of walkways and fast-food courts, malls have long been an iconic, if sometimes unsightly, presence in the American retail landscape. A few were made famous by their sheer size, others for the range of shopping and social diversions they provided.
But the long recession is helping to empty out the promenades. Some analysts estimate that the number of so-called “dead malls” — centers debilitated by anemic sales and high vacancy rates — will swell to more than 100 by the end of this year.
The industry’s woes are worsening. Thinning customer traffic, and subsequent hits to tenants’ sales and profits, prompted Standard & Poor’s Corp. last month to lower the credit ratings of the department-store sector. That knocked Macy’s Inc. and J.C. Penney Co. into junk territory and pushed others deeper into junk. Sears Holdings Corp., a cornerstone tenant at many malls, is expected to close 23 stores this month and next.
The severity of the recession is turning some malls that were once viewed as viable into potential casualties. “Any mall that’s sitting on life support is probably going to get its plug pulled” as the economy stalls, says Michael Glimcher, chairman and CEO of Glimcher Realty Trust, which owns 23 U.S. properties….
“This time around, because of the dramatic changes in consumer spending practices, we’re very likely to see more malls in the death spiral than we’ve ever seen before,” says Green Street analyst Jim Sullivan.
Failing malls didn’t get into trouble overnight, and most began their descent long before the tough climate. Typically, a mall begins to suffer due to job losses and other pressures in the surrounding neighborhood or because a newer mall opens nearby. The loss of key tenants — such as the wave of department-store closures over the past three years — hastens the demise. Also sapping malls’ vibrancy: the increased preference among consumers for big-box stores, such as Wal-Mart Stores Inc. and Target Corp., which rarely operate in malls.
Developers, in fact, have been moving away from the enclosed-mall format in favor of big-box centers anchored by free-standing giants such as Wal-Mart or open-air shopping centers with tiny parks and outdoor cafes sprinkled among fashion stores.
“We started to see things heading south,” says Penney CEO Myron “Mike” Ullman III. It was important, he notes, to “get ahead of this” mall problem by reviewing Penney’s new store strategy to determine whether it might relocate existing mall stores. Over the past 18 months, Penney’s weekly sales have been trending better at stand-alone stores that aren’t attached to traditional malls.
Saks CEO Stephen Sadove is talking with mall owners about closing a few of the retailer’s 53 Saks Fifth Avenue stores. “You have to ask yourself: Do you believe the prospects for a given store or mall are going to be positive? Can you make money over the long term?” he says.
For towns and cities that are home to dying malls, the fallout can be devastating. Malls hire hundreds of workers and are significant contributors to the local tax base. In suburbs and small towns, malls often are the only major public spaces and the safest venues for teenagers to shop, hang out and seek part-time work.
Commonly, “the mall will be a meeting place, or, in some cases, like a city center,” says Carl Steidtmann, chief economist at Deloitte LLP. The deterioration of a mall can spawn broader problems, he notes. “It can become a crime magnet.”
The gradual fade-out of marginal malls has prompted a thriving Web culture dedicated to sharing information about dead or dying properties. Sites such as…Deadmalls.com and Labelscar.com are drawing traffic from mall employees, shoppers and other mall mourners who swap stories, photos and predictions about the status of centers on their way out.
“So sad!” wrote Edith Schilla, 45 years old, of Independence, Ohio, in an April 3 posting on Labelscar.com following her visit to a Sears liquidation sale at the Randall Park Mall in North Randall, Ohio. “I was able to peek into the mall and was so overtaken by the vast emptiness,” she wrote, recalling it as previously “so busy.”
During past economic cycles, dead malls were frequently redeveloped into mixed-use space that includes apartments, offices or parks. Repurposing mall space today will be more difficult. Lenders and investors are moving away from commercial real estate as property values decline and delinquencies rise on debt used to acquire or develop properties.
Kaid Benfield wrote recently on his NRDC “Switchboard” blog about the watershed changes that appears to be happening in the residential and commercial real estate markets:
Even before the recession began, the market for residential and commercial property in the US was changing away from a model of unmitigated suburban sprawl and toward one of more central locations, urbanity, and walkable neighborhoods. The foreclosure crisis, spike in gasoline prices, and then the full-blown recession have only placed the changes in the market in starker relief. I believe that we are unlikely to return to the old days of sprawl’s utter and complete domination of the real estate map.
Finding new uses for old shopping centers will likely be a significant challenge for planners and real estate developers over the next decade. While revitalized downtown areas are making use of 19th Century buildings and neighborhoods to generate new businesses and profits, the iconic, post-World War II shopping mall design of the 20th Century too often fails to offer the same flexibility.
However, some shopping center locations (especially older malls surrounded by higher density suburban residential neighborhoods) have potential as new “downtown-like” nodes of community activity.
From “What should be done with dead malls?” - an article on the Smart Growth America website:
Chris Nelson of the University of Utah has also long pointed to abandoned and out-of-date shopping malls as a prime opportunity to make room for more people and reuse a building or a parcel of land that has become a scar on a community’s landscape.
“Strip malls offer a particularly keen opportunity. Look past the big box stores, Nelson said, and you have large, flat, well-drained, developable space linked to existing infrastructure. Broad rights-of-way allow easy access. There is space enough to bring in tracks for light-rail trains or streetcars. They are perfect for much denser, mixed-use developments in which people can live, work, shop and eat, he said.”
The key to future success is to employ a finer-grained, more pedestrian/neighborhood oriented development pattern that includes a wider mix of land uses. Before the current economic downturn closed down redevelopment activity across much of the U.S., some dead malls (such as the Plaza Pasadena) were being partially or completely demolished and redeveloped in this way. As the country comes out of this current financial crisis, planners with dead malls in their jurisdictions will be watching closely to see if this trend continues.
re:place Magazine says:
[...] taxes; towns feel pinch [The Globe and Mail] INTERNATIONAL Urban metabolism [The Economist] Dead Malls: Suburban Planning Nightmare or Opportunity? [Building Place Notebook] David Byrne Turns His Book Reading Into Bicycle Advocacy Primer [S.F. [...]
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- Marc Shaw