Shawn Massey, CCIM, SCLS

A Tale of Two Malls: A Caution for Out of Town Property Owners!

Last week I was touring my city with an up and coming national retailer who was looking to expand into our market.  My client primarily caters to areas with a heavy African American and/or Hispanic populations.  During our visit we had the opportunity to visit two urban areas with older enclosed malls that could provide an opportunity for my client, to open a new retail store.

Both malls are in geographical areas of the city that need some attention and revitalization.  The demographics as it relates to race, household income and population density are similar in nature and both communities in the past 10-20 years have seen a dramatic change in the community in terms of shifting demographics.

For the sake of this commentary I will call the first mall the North Mall.  My client wanted to visit the inside of this mall to take pictures.  I had not planned to include this property on my tour due to recent visits that showed the mall to be underperforming and a serious lack of quality management.   I am pretty sure that it will be closed down completely in the near future.  My client insisted that we visit the property in hope of a good lease deal.   While walking through a property that was at best 20% occupied to look at the multiple availabilities we were approached by two security officers who were not in uniform and we were asked to leave the property immediately as we were taking pictures which was not allowed (no sign was posted).   I explained to them who we were and that my client was looking at expanding his retail concept into the city.   They did not want to hear that we were a potential new tenant but that we needed to leave the property immediately or they would call the police.  This was the second time I have been escorted from this mall!  This property has been the topic of many recent articles and conversations regarding its future and the vitality of the surrounding community. 

Later that evening I had the opportunity to visit what I will refer to as the South Mall with my client.  Granted the mall manager knew that we would be coming by to see the mall.  Another developer from Texas called the mall owner and said this retailer was coming to our city to look for sites.  The on-site manager waited to almost 6:30 p.m. that night to give us a personal tour of the property even though I told him it was not necessary and I was very familiar with the mall.  I know he typically gets off at 5 p.m.  We were greeted by a professional manager who was well dressed, pleasant and knowledgeable of his property.  He not only showed us each opportunity of which only two existed, but allowed us to take pictures, introduced us to multiple tenants who knew him by first name and provided the information my client needed in regards to mall performance.  The property was well tenanted, very clean and I felt extremely safe walking through this mall.

In retrospect, I can understand why the South Mall is performing very well.  You have an owner who many years ago saw that the community was changing and they chose to embrace the demographic shift and begin finding quality retailers who cater to a predominantly African American clientele.  Many malls around the country chose to hold on to the past and saw their property performance dramatically decrease with an ever increasing vacancy rate.  The North Mall was one of those malls who waited until they had very few tenants left before they started marketing to right retailers who would support the area population.  A few years ago when the North Mall was sold we were excited that maybe the new mall owners would understand how to run a mall property in a predominantly African American urban community.  I have a vested interest in the North community thriving economically and making a comeback as I help develop three charter schools in the area.  It is obvious the North Mall owner or its local manager does not know what it will take for this property to be successful!  One owner saw us as opportunity while the other felt we were a threat.  One owner has embraced demographic change while the other continues to operate in fear.  One property is economically viable and the other should be razed.  One property is professionally managed and the other is managed poorly.  One property’s ownership networks with other developers who develop similar properties.  The other owner I cannot say what they do to network across the country.  Granted security did their job and saw someone taking pictures in their mall which is out of the ordinary, but once we identified ourselves they should be trained to see an opportunity to help bring the mall back to life with new tenants.  I may be somewhat biased as I have met the North Mall manager prior to last week when I was escorted out of the mall the first time.  I had been in the mall that time talking to the few tenants about expanding to other properties that our company leases.  That day she was dressed in jeans and a t-shirt.

Thus the Tale of Two Malls exists in our city.  Both could be thriving economic drivers of their respective communities and provide a catalyst of economic stability.  One I expect to see continue to improve over the next decade and the other I think will probably be torn down in the next few years.   The South Mall shows us there is a way to do things right and keep properties filled and economically viable.

My caution to out of town property owners is to be wary of what is happening at your property.  Retailers are expanding, but are your staff ready to recognize the opportunity when it arises… 

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Cheers,

Shawn

Shawn Massey, CCIM, SCLS is a partner with The Shopping Center Group a 3rd party retail real estate advisory firm in their Memphis office, an adjunct professor in the graduate real estate program at The University of Memphis, in 2013 Shawn will join the faculty of the Homburg Academy teaching on-line real estate classes world-wide and is also co-founder &Chairman of the Board for the Memphis Business Academy charter schools (K-12th grade) in the Frayser area of Memphis.  

For all your retail real estate needs (tenant representation, landlord representation and property, investment & land sales) I hope that you will choose The Shopping Center Group and me to represent you and your business.  We understand that representation is a privilege and that you have a choice!

The opinions expressed in this post are entirely my own.  They should not be considered the opinion of The Shopping Center Group, LLC in which I am associated.

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2 comments

  1. Nadina Cole-Potter /

    Well done! I have seen similar scenarios in changing neighborhoods. The job of property managers is to protect and enhance the value of the owner’s property. Any internal or externbal management company that is not meeting those requirements is failing. Communities don’t fail a shopping center; management fails the community of its tenants’ customers.

  2. Great observations! Stale properties go vacant while those willing to embrace the trends and shifts stay relevant and full.

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