We hear so often about the fading of brick-and-mortar retail that it might seem hard to believe that there are companies out there in the market to buy more malls. Yet there are buyers for distressed malls, even when the owners are about to walk away. Yet there are companies that specialize in this kind of thing, and they aren’t tearing them all down or turning them into apartments.
Bloomberg News recently checked out Hull Property Group, a company out of Georgia that began taking over and restoring failing malls even before the Great Recession. What are the steps it takes to bring a shopping center back to life?
Choose carefully. People still like to gather at malls and shop for some things in person, but don’t buy in areas already have newer and spiffier malls. The best candidates for revival aren’t too remote, but also don’t have a good enclosed mall for another 50 to 100 miles around.
Don’t pay a lot. Hull recently bought a mall in Kingston, NY, that was last appraised at $87 million for $9.4 million. Paying very little to buy a mall means having some extra money to throw around to spruce it up, and being able to charge low rents.
Kick anyone who makes you look bad out. At the same time, identify “downmarket” retailers that might be keeping other stores away, and don’t renew their leases. This depends on what kind of business the mall is interested in: Maybe the new owners’ goal is to keep as many stores leased as possible, and that’s cool too.
Build community. Malls are the default gathering spaces in many suburbs and exurbs, and doing things like improving movie theaters and bringing in some tenants that aren’t retail can help build up that idea. Party spaces, medical offices, churches, and colleges are all tenants that malls can bring in strategically, not just out of desperation.
“We want to be in markets where the mall is still one of the more interesting things to do on the weekend,” the director of retail at another real estate firm buying up cheap malls told Bloomberg. Is that sad, or hopefuil?
by Laura Northrup via Consumerist
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