While malls in wealthy neighborhoods continue to attract shoppers and tenants, growing government involvement with shopping centers in less affluent areas is another sign that private investors may be losing interest in the worst performing malls, even ones that can be had at cheap prices.
“It’s a new issue,” said Thomas Dobrowski, executive managing director of capital markets at real-estate services firm Newmark Knight Frank . “When a mall gets to a point of no return and when no private buyer is willing to reinvest in it, it comes down to the value of the dirt.”
Still, government takeovers face many challenges. Malls and department stores often have large, unwieldy footprints, making it tougher to propose another use for them.
“For big boxes in particular, there are limited uses of that space,” said Michele Wildman, executive director at Genesee County Land Bank.
The Genesee County Land Bank in Flint, Mich, currently has a list of 58 commercial properties for sale, including a 101,900-square-foot former Kmart store. But the lack of windows and the large floor plate makes it difficult for such properties to be converted to other uses such as housing.
Plans to reposition malls can also get bogged down if city council members and residents don’t agree to proposed new uses. Some could also be razed when structures are found to be unsound. It can also be complex and time-consuming to buy back malls if multiple parties own different portions of the real estate.
If you’ve never driven past one of these abandoned malls, they’re sad sights to see.