Shopping Center Business

MAY 2015

Shopping Center Business is the leading monthly business magazine for the retail real estate industry.

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MAY 2015 • SHOPPING CENTER BUSINESS • 333 received, including net fiscal benefits (new tax revenue versus the incremental cost of needed increases in government services) and the short- and long-term economic impact, including job creation and in- creases in direct, indirect and secondary spending in the local community. The ability to articulate the need for public investment as a precursor to at- tracting private sector investment and a project's public benefits to the community is often a linchpin for any capitalization plan for redevelopment. In this regard, the timing for redevelopment and capital requirements need to be aligned with the opportunity and the necessity to receive public benefit incentives to support rede- velopment and community objectives. To achieve this goal, a transparent process including detailed pro-forma and techni- cal reports is required to demonstrate goodwill and the necessity for public investment. Oftentimes what was once an institu- tional-grade investment property is now a woefully underperforming mall with long-term debt. This debt may stand as an obstacle for current ownership to rede- velop the property and necessitate a sale to facilitate repayment. However, the op- portunity may exist to keep this debt in place as part of the overall capitalization plan by effectively converting it to a con- struction loan secured by land and guar- anteed by the borrower. Ultimately, a dead mall has to be ap- proached as an opportunity within the context of a specific local community. The end of a mall is symptomatic of change as shoppers and retailers fail to support the asset. Obsolescence is inevi- table unless a mall experiences periodic and intense reinvestment. Ongoing chang- es in design to accommodate generational shifts in demographics, shopping behav- iors and preferences can quickly date a mall and can be irreversible. Owners and investors need to focus on opportunities to transition and reinvent a dying mall as part of a larger redevelopment scheme designed to preserve short-term land val- ue and capitalize on broader long-term community and economic development trends. Change creates opportunity, and the ability to act or partner with a land developer to recognize opportunity and understand and plan for change in part- nership with the local community may provide the basis for turning asphalt into gold. SCB Glenn H. Brill is a managing director in the real estate and infra structure solutions practice o f FTI Consulting, Inc. and provides development advisory services to private and public secto r investors. Contact him at glenn.brill@fticonsulting.com. Classified Architecture/Design MAll c oMpActors professionAl services ACCOUNTING, AUDITS Retail Tenant Sales • Compliance • Restaurant • Specialty Examinations United States • Canada • Caribbean Phone 985.626.9979 • 800.999.LAMY • Fax 985.626.9943 E-mail: kslamy@thelamygroup.com NO COST TO MALL DEVELOPERS FAIR SHARE DIRECT TENANT BILLING For Rubbish Removal A 20 year history of serving • • • • • • • • MALLS• • • • • • • • OLYMPIC MALL SERVICES A division of Olympic Compactor Rentals, Inc. Chip Panciocco 1-800-722-5371 For Classifed Advertising in Shopping Center Business, contact Barbara Sherer: bsherer@francemediainc.com reprints For reprints of articles in Shopping Center Business, contact Barbara Sherer bsherer @francemediainc.com Owners and investors need to focus on opportunities to transition and reinvent a dying mall as part of a larger redevelopment scheme designed to preserve short-term land value and capitalize on broader long-term community and economic development trends.

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