Local governments around the country are doing what few investors will — buying up dead or underperforming mall properties.
Towns and cities are scooping up the beleaguered malls with the hopes of redeveloping or repurposing them for the community, according to the Wall Street Journal. The acquisitions are often made through land banks at bargain prices because no other investor is willing to take the risk.
In Springfield, Ohio, the Clark County land Reutilization Corporation bought up the Upper Valley Mall for $3 million. It is now in talks with investors to redevelop it into a mixed-use site with housing, a soccer field and retail component.
Memphis, Tennessee, bought the Raleigh Springs Mall then demolished it last year to make way for a $28 million Raleigh Town Center, the Journal reported. It will have a library, police station, skate park and 11-acre lake.
Malls have suffered from declining foot traffic and competition from online retailers. Many anchor tenants have vacated spaces or gone out of business entirely, forcing owners to scramble to fill vacancies.
The new owners of the Westside Pavilion mall in Los Angeles, Hudson Pacific Properties and Macerich, are converting 500,000 square feet there into an office park.
A JLL study found that 21 percent of retail-based co-working spaces nationwide are in malls, including one in Chicago.
But big-box properties are hard to redevelop for other uses because of large floor plates and no windows.
Disputes over uses can also hold up a redevelopment, according to the Journal. In some cases, malls comprise numerous parcels owned by different entities, which means a local government has to spend the time to buy them all. [WSJ] – Dennis Lynch