Paradise Valley Mall in Macerich, Phoenix, Arizona.
The future of suburban shopping malls may look like a small community with fewer shopping venues.
Mall of America owner Marcelich announced on Thursday that he has sold his majority stake in the Paradise Valley Shopping Center in Phoenix to an affiliate of Phoenix-based mixed-use real estate company RED Development for US$1
The Paradise Valley Shopping Center in the 1970s has been rezoned to allow this vast land to include high-end grocery stores, restaurants, 3.25 million square feet of residential space, office buildings and some retail stores.
Macerich President Ed Coppola (Ed Coppola) said in a statement: “As the retail format continues to develop in Arizona and across the country, our decision to realize the market value of this non-core asset is very important to Macerich. meaningful.”
As more and more consumers shop online and jump past the ranks of outdated department stores and old food courts, shopping malls full of clothing, footwear and other retail stores are looking for a new life. The Covid epidemic has only accelerated this transition, and the epidemic has kept many Americans at home and surfing the Internet.
Market share and shopper traffic are also increasingly shifting to large retailers such as Target and Walmart. Coresight Research, a consumer research company, estimates that by 2025, 25% of approximately 1,000 shopping malls in the United States will be closed. Usually, due to the closure of one or two department stores in a shopping center, this triggers a wave of closure of other businesses in the shopping center, and the owners have no choice but to find new uses or get rid of the property altogether.
Mark Toro, the managing partner of real estate developer North American Properties in Atlanta, said: “The shopping malls in the United States have reached the end of their useful life.” “Communities all over the United States ignore what was once a center.” “
He said: “These properties usually occupy real estate, and it is best to re-use them to better serve the community.”
Some shopping malls are turning into e-commerce warehouses to meet the growing demand for industrial space from retailers. For example, Amazon opened a distribution facility in Randall Park Shopping Center in North Randall, Ohio. It also took over the Euclid Plaza Shopping Center in Euclid, Ohio.
At the same time, in a shopping mall in Burlington, Vermont, children are now attending a high school that was once a Macy’s.
Experts say that the future of each struggling shopping mall may depend on the situation, depending on the needs of the surrounding towns. For new communities, this may require the property to be completely demolished and rezoned. In some cases, developers will see that the land on which the shopping mall is located is more valuable than the shopping mall itself.
Macerich, who owns or has interests in 47 regional shopping malls, said the transaction with RED Development closed last Monday and generated approximately $95 million in net income. It will retain a 5% stake in the project through a joint venture.
Marcelich’s share price rose less than 1% on Thursday and has risen about 10% so far this year. The real estate owner’s market value is $1.94 billion.