Sometimes, from our perch surveying property trends across regions and asset types, it is easy to forget that real estate is a brick-and-mortar business, and that each building is unique. These are not uniform securities or mass-produced widgets, each one indistinguishable from the next.
Sure, we can talk about the characteristics of the San Francisco office market or the Dallas retail market, but that top-level analysis can skim over the specific facts of individual assets.
For a nice counterpoint, “The Twilight of the Indoor Mall,” a feature on the Collin Creek Mall in Plano, Texas, a suburb of Dallas, takes a deep look at a dying mall:
“Here’s what happens when a mall like Collin Creek Mall dies. After its first major anchor pulls out, stores around it continue to close, slowly but persistently, one at a time, year after year. The remaining stores rearrange, consolidate space, move closer to the entrances. The mall becomes depressing, yes, but it’s still viable. Eventually, though, another anchor decides to pull out. Maybe it’s Macy’s. Maybe it’s JC Penny. Another cavity forms, another dead zone. Foot traffic gets lighter. Management doesn’t tell anybody anything about the future of the mall, because management won’t tell anybody anything until the day they decide to close the mall for good. Stores hear rumors from other stores. Basic upkeep starts to slip. The floors get dirty. The plants die. The mall starts to smell.”
Of course, this story doesn’t have to have an unhappy ending. Struggling properties with high vacancies and low footfall could turn out to be promising value-add opportunities. Perhaps the right asset management plan, with a focus on increasing cap-ex and re-leasing space, can turn such a property around.
Or maybe Dallas really does have too much retail space, and the highest, best use for a fading regional mall is to tear it down and replace it with something else.
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Loretta Clodfelter is production and copy editor with Institutional Real Estate, Inc.
