Start Date
13-12-2024 2:15 PM
End Date
13-12-2024 3:15 PM
Description
The history of regional malls and anchor department stores began with the opening of the two-level, fully enclosed Southdale Mall in Edina, Minnesota in1956. The subsequent long-term growth of the mall concept was driven by post-World War II suburban developments that drew population from the inner cities. Eventually, the mall and department store markets became overbuilt. In the 1990s, mall and department stores struggled due to competition from the emergence of on-line sales. Competition also came from single-tenant, big-box discount stores, like Walmart, Kohl’s, and Target, among others, and neighborhood and community open-air strip centers. As the number of malls and traditional anchor department stores declined, redevelopment scenarios grew in numbers and include total or partial demolition of the mall’s improvements, reuse of the land for other uses, and/or reuse of vacant anchor space. Pricing methodology research for obsolete malls and anchors reveals varied techniques but mostly rely on double-digit capitalization rates. Often assessors avoid the concept of double-digit cap rates and over assess malls. The solution covered in the presentation is detailed comparable sale identification and verification of the important characteristics of the comparables to effectively compare to the subject property to arrive at a fair market-based assessment. I. History of Mall Development • The birth of the mall – 1950s • Post-World War II suburbia • Expansion and popularity – 1960s • Diversification and specialization – 1970s • The Golden Age – 1980s • Saturation and decline – 1990s • Struggle and adaptation – 2000s II. Redevelopment scenarios • Total demolition of inline mall stores and department store anchors and new development types • Partial demolition and new development types • Demolition and/or reuse of vacant anchor department stores only III. Examples of varied new uses for obsolete department stores and malls IV. Pricing methodology for obsolete department stores and malls • Including interview comments from market buyers and redevelopers regarding zoning issues, government/community reception(s), other issues • Summary of market cap rates • Potential disconnects in ignoring structural changes in reuse construction in the estimate of market values and assessed values V. Future expectations
Recommended Citation
Korpacz, Peter and Laposa, Steve, "Evolution of regional malls: Repurposing of anchor department stores and malls" (2024). IAAO Annual Legal Seminar. 13.
https://researchexchange.iaao.org/legal/legal24/sessions/13
Evolution of regional malls: Repurposing of anchor department stores and malls
The history of regional malls and anchor department stores began with the opening of the two-level, fully enclosed Southdale Mall in Edina, Minnesota in1956. The subsequent long-term growth of the mall concept was driven by post-World War II suburban developments that drew population from the inner cities. Eventually, the mall and department store markets became overbuilt. In the 1990s, mall and department stores struggled due to competition from the emergence of on-line sales. Competition also came from single-tenant, big-box discount stores, like Walmart, Kohl’s, and Target, among others, and neighborhood and community open-air strip centers. As the number of malls and traditional anchor department stores declined, redevelopment scenarios grew in numbers and include total or partial demolition of the mall’s improvements, reuse of the land for other uses, and/or reuse of vacant anchor space. Pricing methodology research for obsolete malls and anchors reveals varied techniques but mostly rely on double-digit capitalization rates. Often assessors avoid the concept of double-digit cap rates and over assess malls. The solution covered in the presentation is detailed comparable sale identification and verification of the important characteristics of the comparables to effectively compare to the subject property to arrive at a fair market-based assessment. I. History of Mall Development • The birth of the mall – 1950s • Post-World War II suburbia • Expansion and popularity – 1960s • Diversification and specialization – 1970s • The Golden Age – 1980s • Saturation and decline – 1990s • Struggle and adaptation – 2000s II. Redevelopment scenarios • Total demolition of inline mall stores and department store anchors and new development types • Partial demolition and new development types • Demolition and/or reuse of vacant anchor department stores only III. Examples of varied new uses for obsolete department stores and malls IV. Pricing methodology for obsolete department stores and malls • Including interview comments from market buyers and redevelopers regarding zoning issues, government/community reception(s), other issues • Summary of market cap rates • Potential disconnects in ignoring structural changes in reuse construction in the estimate of market values and assessed values V. Future expectations