Vultures Circle General Growth Properties
The wrangling continues over General Growth Properties (GGP) as it attempts to emerge from bankruptcy. Indianapolis based Simon Properties who appears to be teaming up with New York based Blackstone Partners to purchase the entire shopping center portfolio. Under their offer all creditors would be paid in cash. What could be a major hurdle in Simon’s offer, is the fact that close to 50% of all regional malls would be under the Simon Corporate Umbrella,
Meanwhile Canada based Brookfield Properties has entered the fray by joining GGP management to bring the firm out of bankruptcy as two unique entities. Both desire that the company exit bankruptcy as a stand-alone company and not taken over by another.
The dark horse in this epic retail development battle is Australian based Westfield properties who, according to reports in Crain’s Chicago Business, have signed a non-disclosure agreement with GGP.
With the economy still in the doldrums one wonders whether some retailers are going to make it. Additionally, how the regional malls themselves will survive is a huge question. Most of the retail development has moved toward “Lifestyle Centers” and other mixed use developments. The regional mall is dying as specialty retailers and mass merchandisers like Wal-Mart and Target take market share away from the big department store anchors that take up the bulk of the square footage of the malls.
Regional Malls can survive if they adapt to a different business model. Perhaps creating a hybrid of the indoor mall and lifestyle center. Or create a mixed-use development that could be called a city within a city.
Let’s take GGP’s Springhill Mall (West Dundee / Carpentersville, Illinois) as an example. The retail area surrounding the mall has been plagued by vacancies. The trade area has fairly strong demographics. It could be the test for a new retail development business model. The area lacks a sufficient entertainment venue to draw additional foot traffic. This could be an addition to one wing of the regional mall. Should other department stores scale back as a result of the current great recession a reconfigured mall might include the following elements to the “city within a city” development concept:
Wing One—(Sears): Entertainment / Parking Garage.
Wing Two—(Carson, Pirie, Scott): Senior residential development with parking.
Wing Three—(Kohl’s): High-rise apartment complex with secure parking.
Wing Four—(JC Penney’s): Condominiums with parking garage.
Of course the economy will have to improve in order to put many of these development ideas in play. Working with village officials where individual regional malls are located, creative development ideas can be found to save them from severe obsolescence.
Tags: Blackstone Group. Regional Malls, Brookfield Properties, General Growth Properties, shopping centers, Simon Properties, Springhill Mall, Westfiled Properties
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