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Mall Rats II
I wrote a blog entry last week about the country's glut of shopping centers and how they're starting to empty out. Money-losing tenants are leaving, and the property owners can't refinance their mortgages. I figured a follow-up was in order, based on some of the comments people submitted.
Ali asks, "Is anyone attempting to convert unoccupied real estate to other uses or to return the land to its previous condition?"
Great question, Ali. I'm sure just about every city will have to tackle that one. Seems to me, converting these empty shopping centers or tearing some of them down and creating green space could be pretty good job-creating stimulus. Not to mention the aesthetic, quality of life bonus. It'll take some creative thinking, and of course, money.
I found one answer in this article from the Colorado Springs Gazette.
It talks about all the retailers going out of business just in Colorado Springs: "Three Circuit City electronics stores, two Western Warehouse clothing stores, a Macy's department store, a Ross clothing store, a Steve and Barry's sportswear shop, a Linens 'N Things home-decorating store, two local furniture stores and many smaller shops."
Further down, there's this quote from a local retail leasing agent:
Some shopping centers will end up having to convert retail space they can't lease to other uses, such as churches, entertainment businesses like the Mr. Biggs Family Fun Center or warehouse and distribution space.
Some centers might be demolished and become a site for a different type of shopping center or another use, such as office or industrial buildings, when the local economy recovers.
Marketplace PM also had a story today about a closed CompUSA store in Gaithersburg, MD, that' s being converted into a veterinary hospital. The property manager says two years ago, there would've been a dogfight among retailers to get that space. Now, just dogs. But he's thrilled to have the tenant.
In my first post, I also mentioned China's out-of-control building of office towers, and then I saw this story in the Los Angeles Times.
It's about Beijing's pre-Olympic building boom and just how many empty skyscrapers the city has now. Check out these numbers:
500 million square feet of commercial real estate has been developed in Beijing since 2006, more than all the office space in Manhattan. And that doesn't include huge projects developed by the government... 100 million square feet of office space is vacant -- a 14-year supply if it filled up at the same rate as in the best years.... when 7 million square feet a year was leased.
Not only that, but the National Stadium, which hosted the Olympic opening ceremonies, has only one event scheduled for this year. Its owners plan to demolish the area around the stadium and turn it into ... sigh ... a shopping center.
I have bean amazed by the constant growth in retail, commercial and office space construction in my area dispite obviously high vacancy rates. Even during boom times I have wondered if maybe some landlords and property owners shouldnt be more realistic on rents and leases to reduce the huge glut of vacant space. Now the market has soured and there are even more, some brand new spaces, sitting empty. What kind of financial advantage are people getting from this? Taxe write offs I suppose for one. Shame is it makes the entire area look depressed even more than it is. Entire malls, retail strips and warehouses sit empty for months, often years at a time.
Why do we have to keep empty buildings? Why not bulldose and try again. Razing the buildings would remove eyesores and provide jobs. Thinking about the next building might provide the opportunity to build a more aesthetic and 'green' building. And jobs.
In my limited world travels, it seems that we are the only country that says once we raise a building, it is wrong to raze the building.
