Financing Suburban Retrofits Strategies for Dead & Dying Mall Redevelopment
by
T
he redevelopment of dead and dying
were once the centers of community or significant sources of municipal tax revenue into large-scale mixed-use districts is one prescription for retrofitting suburbia. However, retrofitting the low-density, single-use, auto-oriented forms of suburbia with more sustainable urban forms is only an idea sans the ability to secure the financial capital required for its implementation. The ownership structures and the financial characteristics of these types of shopping centers and the overall complexity of the mixed-use programs that are proposed to revitalize them, among other things, can act as barriers to their redevelopment. Furthermore, the mixed-use district model for redevelopment is not a standardized development type that easily conforms to the underwriting models of most real estate development financiers. The convergence of an increasing number of dying shopping centers, the wasteful consumption of land by conventional development, and global climate change explains the significance of malls that
16 PANORAMA2010
Joseph Portelli
this research. Green Street Advisors, a real estate research firm, estimated that the number of dead malls would exceed 100 properties by the end of 2009 (Hudson & O’Connell, 2009). Within the next fifteen years, approximately 2.8 million acres of greyfields will become available (DunhamJones, 2009). These greyfields represent infill development opportunities in aging, built-out suburbs as opposed to conventional development in fringe areas. Conventional development patterns result in land consumption that outpaces population growth by 6 percent. The transportation sector already accounts for 33 percent of the carbon dioxide emissions in the United States and accelerated consumption of land in “leap-frog� patterns increases the demand for the private automobile (Ewing, 2007). Suburban retrofits, particularly the transformation of dead malls into mixed-use districts, provide land use, building, and infrastructure programs that preserve land and the quality of the environment, reduce demand for the automobile, and lower carbon emissions in an era where a growing global population will place additional stresses on these factors.
The Rise of the Regional Mall The rise of the regional mall depended on the use of automobiles and growth and demographic changes in the suburbs. Household relocation to the suburbs accelerated the phenomenon of large-scale retailers moving away from downtowns between the World Wars (Jackson, 1987). For the commercial developers that built new, income-producing properties to serve these neighborhoods, a modification of the federal tax code in 1954 allowed owners to accelerate the depreciation of the value of the building in seven years rather than forty years. After multiple rounds of depreciation, owners abandoned these structures in favor of new buildings at more distant sites, such as new highway interchanges in undeveloped greenfields (Hayden, 2003). Highway interchanges not only created additional links to previously inaccessible, unencumbered, and cheap land, but also provided access to an expanding customer base with rising incomes. Between 1940 and 1950, the population of the United States grew by 20 million, disposable income grew from $979 per year to $1,314,