3 Ways To Survive A Retail Meltdown

[M II A II R II K]

How to Survive a Retail Meltdown


Apr 30, 2017

By NOLAN GRAY

Read More: https://www.citylab.com/work/2017/04...eltdown/524868

The proliferation of half-vacant shopping centers and abandoned malls on the fringes of cities has become such a pervasive problem that we have a new word for it: greyfields. Chances are you have a few in your community: acres of paved parking with weeds creeping through the cracks and a dilapidated big-box structure standing in the middle. They’re the increasingly hard-to-ignore manifestation of what’s often described as the retail meltdown.

- The retail meltdown has claimed both mom-and-pop shops and once-mighty retail titans; Macy’s, J.C. Penney, and Sears are all in the process of closing hundreds of locations. As these big anchor stores lose their grip, so go the smaller ones. Without big names to bring in customers, mall and shopping center owners are finding their business model slipping away. --- Some may find pleasure in the aesthetics of dead-and-dying malls, but they pose big challenges for the communities around them: Besides functioning as ugly, life-sucking border vacuums, defunct shopping centers represent lost tax dollars for cash-strapped municipalities.

- City planners can empower small developers by easing ’70s-era anti-urban use and density restrictions in and around downtowns, as cities like Buffalo and Baltimore are doing with their zoning updates. Clearing out stodgy old lists of permitted and prohibited uses and allowing for small-scale mixed-use development in urban residential areas—think corner delis and neighborhood shops—can provide space of viable local commercial activity, creating a stronger community in the long term. For cities that bought heavily into subsidizing large suburban shopping centers, this transformation of American retail will be painful. But the silver lining is that the meltdown might provide the impetus for city leaders to make desperately needed policy reforms.

Here are three ways that cities could fend off the retail meltdowns in their midst:

• Ease land-use restrictions: The zoning simply won’t allow much beyond conventional big box retail. A quick survey of your typical zoning ordinance explains why. In many cases, you will find that arterial roads—those most likely to host greyfields—are zoned exclusively for suburban-style big box and strip-mall developments. These districts often require an ocean of parking and massive setbacks from the road while prohibiting common non-retail uses, including residential, light industrial, and occasionally even office space.

• Rethink economic incentives: From an economic perspective, retail has been one of the chief employers in many small communities. From a political perspective, bringing in a Wal-Mart or opening a new mall allowed for a ribbon-cutting ceremony and provided a clear signal to voters that jobs were on their way. But cities and towns gave out millions of dollars in tax breaks and free land, while building out roads and utilities on the edge of town. Given the massive amounts of public infrastructure needed for many of these developments, conventional suburban retail developments are often a drain on tax coffers in the long-term.

• Think corner stores, not big boxes: For many city planners, the enormous size and stability of large-scale suburban retail developments were seen as strengths. After all, if everything goes according to plan, they make tax collection and regulatory enforcement easy. As the retail meltdown reveals, however, these developments are far more fragile than previously anticipated. In dynamic urban economies, smallness, accessibility, and a high-quality experience are more important. Unlike rows of interchangeable national chains on the edge of town, a more diverse ecosystem of small locally owned businesses can rapidly respond to consumer need while offering experiences that can’t be replicated through e-commerce.

.....

[pdxtex]

mall development was speculative from the get go in many communities too. it was common when malls were first being developed in the 50's, to allow additional tax breaks on "expected" loss, due to depreciation, even before many of them opened. so the developer got a break on a future uncertainty from the get go. sounds like a pyramid scheme..

[M II A II R II K]

Get ready for the regional shopping mall apocalypse

Read More: https://www.vox.com/new-money/2017/5...all-apocalypse

U.S. Shopping-Center Classification and Typical Characteristics: http://www.icsc.org/uploads/research...SIFICATION.pdf

The overall American economy is in reasonably healthy shape right now, but there’s one area of the economy that’s struggling: regional shopping malls. The problems are trickling down, essentially, from the department store sector, which has been rendered increasingly irrelevant by online shopping.

- A specific company or two getting into trouble isn’t necessarily that big of a deal, from an economic standpoint. But the problem in this case exists throughout the entire department store sector. Whole malls are built around department stores — both literally and economically — and without those anchors, the entire viability of the mall ecosystem is jeopardized. The next recession, even if it’s mild, could leave America’s suburbs littered with a new generation of ghost malls.

- The International Council of Shopping Centers offers a convenient six-part categorization of the American shopping mall. At the bottom end is, of course, the humble strip mall. The more dignified “neighborhood center” built around a supermarket is still primarily in the business of offering convenience, serving essentially only the group of people who live closer to that supermarket than to another supermarket.

- The top two categories — the regional mall and the super-regional mall — of which there are, combined, about 1,200 around the country are where the department store pain comes into play. There are only a few of these regional malls in any given metro area, each is anchored by one or more department store, and each draws in customers from a wide shopping radius. A department store is supposed to be a place you don’t need to visit all that frequently, but when you do need one you are willing to travel.

- Amazon keeps rolling out innovative ideas in terms of grocery shopping and convenience stores but they haven’t yet perfected a really solid model in either of those sectors. And, of course, they can’t match the intimate shopping experience of smaller shops, locally owned boutiques, or various kinds of specialty stores. And even though their delivery keeps getting faster and faster, it’s still usually not as fast as driving to a store yourself. Maybe someday the internet will crush all of retail, but that day is not yet upon us.

- A large shopping mall, much like a traditional Main Street or downtown, is a complex series of interdependencies; everything you find in one depends, in some way, on the other parts of the mall. So if one part goes down, it can take the whole enterprise with it. The presence of a food court makes the mall a more attractive shopping destination than it would be without dining options. But the destination shopping provided by the mall’s durable goods retail provides the fundamental rationale for the food court’s existence.

- The mall is a good place to visit a single-brand apparel store because there are other single-brand apparel stores there and you can conveniently visit several of them. And it’s a good place to locate your single-brand apparel store because customers are bound to be there and may stop into your store “just in case” — even if their primary intention was to shop elsewhere. Specialty retailers make the overall mall visit more pleasant and entertaining, but they also benefit crucially from foot traffic and impulse purchases of items that wouldn’t inspire a dedicated trip.

- Malls overtook traditional downtowns in most communities because they are planned and built, by design, to maximize the economic value of these interaction effects and to integrate well with modern transportation technology. But specifically because these are planned communities built to precise specifications, they are fragile. The architecture of a regional mall does not lend itself to large anchor store locations being broken down into smaller shops since the doors and walkways aren’t in the right places.

- These issues extend beyond the physical layout of the mall. As Eric Gould, Peter Pashigian, and Canice Prendergast wrote in a 2005 research paper, the complicated interdependencies are also embedded in law such that “mall store contracts are written to internalize externalities through both an efficient allocation and pricing of space, and an efficient allocation of incentives across stores.” In effect, some stores are being charged a penalty rent for the right to gain access to the foot traffic provided by the anchors. With them gone, the entire physical and legal infrastructure binding the rest together vanishes.

- In the long run, most of the mall spaces will probably have to be entirely reworked into something new. But even this can be harder than it seems. The owners of a ghost mall in White Flint, Maryland, had an ambitious plan to redevelop the site as a mixed-use town center but has been stymied by lawsuits from the former mall’s lone remaining tenant. Meanwhile, hosting a regional mall is a convenient way to extract property tax revenue while providing a minimum in public services, since a mall doesn’t need schools and generally provides its own miniature security guards and janitors.

.....

[Pedestrian]

In dynamic urban economies, smallness, accessibility, and a high-quality experience are more important. Unlike rows of interchangeable national chains on the edge of town, a more diverse ecosystem of small locally owned businesses can rapidly respond to consumer need while offering experiences that can’t be replicated through e-commerce.

As Ronald Reagan said, "Government isn't the solution, government is the problem." There needs to be a MIX of store types and FREEDOM to build and operate, with appropriate controls on physical appearance and form, what the market wants.

I live in a city that has gone too far in keeping out national and "big box" chains, resulting in prices for many staples that only the rich can afford. I mean the service and quality at mom/pop grocers selling organic "heritage" meats can be superb, but my cat doesn't now how much I paid for her national branded litter (and truth be told, Wal-Mart sells a store brand that's better and cheaper). If I buy it anywhere in SF, I'm going to pay 30% more than at Wal-Mart so guess where I buy it: Walmart.com (free shipping).

In NY and in some other large cities, it is common to put what might be free-standing "big box" stores in separate "fold-up" buildings in the middle of acres of parking rather into retrofitted spaces in older downtown buildings. So the common form of such stores isn't the only option when its inappropriate as in heavily urbanized areas. We in SF are also taking what historically were traditional supermarkets with suburban-style parking lots, building housing on the lots and putting the supermarket on the ground floor or even a basement floor (with some but not as much parking below that). The same could be done wth any laege format retail.

[montréaliste]

Originally Posted by Pedestrian

As Ronald Reagan said, "Government isn't the solution, government is the problem." There needs to be a MIX of store types and FREEDOM to build and operate, with appropriate controls on physical appearance and form, what the market wants.

I live in a city that has gone too far in keeping out national and "big box" chains, resulting in prices for many staples that only the rich can afford. I mean the service and quality at mom/pop grocers selling organic "heritage" meats can be superb, but my cat doesn't now how much I paid for her national branded litter (and truth be told, Wal-Mart sells a store brand that's better and cheaper). If I buy it anywhere in SF, I'm going to pay 30% more than at Wal-Mart so guess where I buy it: Walmart.com (free shipping).

In NY and in some other large cities, it is common to put what might be free-standing "big box" stores in separate "fold-up" buildings in the middle of acres of parking rather into retrofitted spaces in older downtown buildings. So the common form of such stores isn't the only option when its inappropriate as in heavily urbanized areas. We in SF are also taking what historically were traditional supermarkets with suburban-style parking lots, building housing on the lots and putting the supermarket on the ground floor or even a basement floor (with some but not as much parking below that). The same could be done wth any laege format retail.

Yes, and by the same token, I think Ronald Reagan probably consumed abusive amounts of jelly beans.

[NorthernDancer]

https://www.thestar.com/business/201...y-survive.html

Why Canada's top tier malls thrive while local malls barely survive

Blake Hutcheson, CEO of Oxford Properties, wakes up every morning thinking about how to outthink, outpace, outdo Cadillac Fairview, headed by his friend and competitor, John Sullivan.

“It’s like playing in the NHL. You put your jersey on and fight the hardest that you can fight and then you have a beer after the game,” Hutcheson said.

Sullivan gets up thinking how to beat everyone, including Oxford Properties and Amazon.com.

“Nobody owns more high-quality retail malls in this country than we do. That obviously puts us in position ‘A,’ but it also means everyone is also trying to knock us off that perch,” Sullivan said.

Hutcheson and Sullivan operate at the top of the retail real estate sector in Canada, each one in charge of a multibillion-dollar empire operating on behalf of a large pension fund.

If you’ve shopped at a top-tier mall in Canada, it was likely owned by Oxford or Cadillac.

While neighbourhood malls are struggling to attract tenants and shoppers, top-tier malls like Yorkdale, an Oxford property, and Toronto Eaton Centre (TEC), a Cadillac Fairview property, are raking in profits.

Productivity, measured in sales per square foot, was $1,651 at Yorkdale for the 12 months ending Aug. 31 and $1,488 at TEC, according to a Retail Council of Canada report.

Malls at the bottom of the ladder, meanwhile, struggle to ring up sales of $325 per square foot.

Abandoned malls — sometimes called zombie malls — are becoming a problem in the U.S. Last summer the mayor of Akron, Ohio, asked residents to stay clear of the Rolling Acres Mall, which has been boarded up for years, becoming the site of crimes ranging from trespassing to a possible murder.

Hutcheson does not believe Canada will see the widespread mall closures taking place south of the border because Canada is materially under-retailed vis-à-vis the U.S.

Industry estimates peg the amount of mall space in the U.S. at 25 square feet per person, whereas in Canada it's closer to 15 square feet per person.

Hutcheson believes people still want and need to be in social environments, which malls provide.

“Malls aren’t going away. So let’s take that off the table,” Hutcheson said.

[Chef]

Dead malls could be the '80s and '90s era lofts of the future. It would be the perfect place for artists, nightclubs and cheap living. You could convert the smaller stores into living spaces, the larger spaces become venues and the food court remains a food court - a self contained walkable community. This is how bohemia goes to suburbia. Artists, musicians and other marginal types have always lived in the detritus of the discarded ideas of previous eras. There is no reason why a dead mall in an aging blue collar suburb in 2025 would be any different than the Lower East Side in the '70s.

[mhays]

Regarding housing, it would almost certainly be cheaper to entirely rebuild vs. try to retrofit crappy buildings that aren't sized right or generally suitable. Also, you'd want more density than most malls.

Some commercial uses would be easier, though those would be odd fits as well, generally.

[emathias]

Originally Posted by Chef

...
Artists, musicians and other marginal types have always lived in the detritus of the discarded ideas of previous eras. There is no reason why a dead mall in an aging blue collar suburb in 2025 would be any different than the Lower East Side in the '70s.

Some artists have already tried romanticizing the suburbs in prose and/or film. Eric Bogosian, William Upski Wimsatt, Kevin Smith, Todd Solondz, to make a few. But I don't think there's really enough interest by a large enough subset of creative types to turn malls into artist communities en masse. That's not too say that none will emerge, but there are many, many ways in which urban warehouse districts are completely incomparable to a dying mall. The biggest way is connections to other parts of the region. Warehouse districts have at least usable public transit, even if it's not as good as other, more populous neighborhoods, it's far better than transit would be for a dying mall. The same for biking. The driving infrastructure may be better for a mall, but an artist crashing in a warehouse district could live just fine without a car if they needed or wanted to, but that would be a lot more isolating in a suburban mall.

[Via Chicago]

i know everyone has this romantic notion of artists living in old lofts and walking to the corner deli, but the reality is most cant afford these urban neighborhoods anymore in lots of cities. also, i would have to imagine for many artists (not second/third/fourth wave imitators), a car is actually a necessity depending on the kind of work they do.

[mhays]

Originally Posted by Via Chicago

i know everyone has this romantic notion of artists living in old lofts and walking to the corner deli, but the reality is most cant afford these urban neighborhoods anymore in lots of cities. also, i would have to imagine for many artists (not second/third/fourth wave imitators), a car is actually a necessity depending on the kind of work they do.

The idea of a 1,000 sf loft in a good neighborhood is probably past tense. But I'd guess the average semi-serious painter moonlighting as a barista will live in a cheap apartment with a roommate or two ($600 ea), and not have a car.

Sculptors might need to move stuff, but they often belong to collaboratives or have deals to use commercial space of whatever sort. And they can truck-share in some fashion when needed.

[JManc]

Here in Houston, a lot of artists rent spaces/studios in collaborative art galleries that are converted warehouses. Quite a few of them around the city with new ones sprouting up all time. Whether they're painters, sculptors or whatever, this seems to be the trend in a business that does not have a steady revenue stream. They go home to typical apartments or houses and drive a Camry. I have a painter friend to rents a typical two bedroom apartment west of town and uses one of them as a studio and has a normal 9-5 to pay the bills.

[MolsonExport]

https://forum.skyscraperpage.com/sho...d.php?t=204693

[Pedestrian]

The place where old-fashioned malls are beating Amazon: Small-town America
By Jill Rothenberg May 20 at 11:45 AM

. . . When the (Pueblo Mall) was built in 1976, Pueblo was a booming steel town. The Colorado Fuel and Iron Co. was the city’s largest employer, and a now-empty meatpacking plant also offered good wages. The mall — with its 1,100 retail jobs — has outlasted them both. It’s also the social hub for the city — and for the many small towns east to Kansas and south to New Mexico.

“Any time I get out of town to go to the mall and maybe to Sam’s Club, I guarantee that within an hour or so, I’m going to run into someone I know,” said Steve Francis, 60, of Lamar, a town of nearly 8,000 people 120 miles east of Pueblo near the Kansas border. “You take your family, your neighbors, and you make a day of it. The Pueblo Mall isn’t just the only game in town two hours away, it’s the only game in town for three counties.”

The Pueblo Mall is an outlier in the age of Amazon.com, when socks and laundry detergent and televisions — nearly anything you can think of — can be delivered to your front stoop within hours. The rise of online shopping has summoned a death knell for some of the old standard-bearers of retail.

Macy’s and J.C. Penney, for instance, have in recent years reported crippling losses and widespread store closures. When those big anchor stores close, suburban malls find it hard to replace them. Many ’60s- and ’70s-era enclosed malls have been abandoned, razed or reimagined . . . .

Despite Pueblo’s three Walmarts and the arrival of a Dick’s Sporting Goods and an Ulta Beauty store, the Pueblo Mall is bustling. On weekends, its nearly 3,000 outdoor parking spaces fill up. Inside are a few relics of the golden age of American malls: Amy’s Hallmark, Claire’s, Kay Jewelers. And in the food court is an Orange Julius, with its old-school classics and a modern update: smoothies . . . .

. . . the mall’s average sales per square foot are healthy, holding at around $400 over the past six months. He attributed this to the bigger-name tenants that have opened in recent years, including Bath and Body Works, Victoria’s Secret, Charlotte Russe, Hot Topic and Zumi.

It draws kids from all over on the weekends. “It’s still not ­unusual to see out-of-town teams from La Junta [65 miles], Rocky Ford [54 miles] or Walsenburg [53 miles] walk around the mall after soccer or basketball games,” said Carol Clark, who works for the CW Railway and lives 25 miles south in Colorado City . . . .

Now it’s among the city’s main employers, along with two hospitals, including the state-operated Colorado Mental Health Institute . . . .

https://www.washingtonpost.com/busin...=.6deb319cb2aa

[mhays]

That's horrifying. I thought they were going to talk about the actual town center.