Greyfield malls: new urbanist opportunity

A new CNU report, still unreleased at press time, shows that the 350 to 600 dead and dying malls in the United States offer prime new urbanist redevelopment opportunities. The report, co-written by PricewaterhouseCoopers (PwC), the Harvard Graduate School of Design (GSD), and Continuum Partners, examines all regional and super-regional malls in the country. Though the exact number of failing malls is still up for debate, it is clear that a significant number of malls are faring poorly enough to be considered "troubled" or "greyfield." After an average of 30 years in business, they are failing for a range of reasons, including construction of newer malls further out in the suburbs and lack of maintenance. CNU initiated the study last year with funding from the Surdna Foundation. With help from Continuum Partners, they worked with PwC to evaluate national research data, while also taking part in a development studio at Harvard's Graduate School of Design, exploring the market, design, and fiscal aspects of redeveloping such sites. These sites average approximately 50 acres, and are typically located in first-ring suburbs adjacent to arterial streets that provide excellent access, with many served by existing transit routes. Strategies for revitalization During the Spring 2000 semester, the Harvard Development Studio at the GSD, co-taught by Professor Rick Peiser, Will Fleissig of Continuum, and Martin Zogran, analyzed three shopping center sites to better understand the potential opportunities for mixed-use redevelopment. They identified seven main strategies for rescuing failing malls: 1) Having the mall evolve from a single structure into a district with distinct sub-districts. 2) Breaking down the superblock into smaller blocks. 3) Turning streets and civic spaces into major outdoor amenities. 4) Creating a hierarchy of “A” and “B” streets. 5) Replacing parking lots with parking structures in advanced phases of the development. 6) Increasing the value of the property by placing residential, office, retail, entertainment, and civic activities in proximity to one another (both vertically and horizontally). 7) Increasing the mix of residential housing types. The students in the Development Studio gathered a full range of information on demographics and competition from other malls for the three sites in New York, California, and Colorado and presented plans for potential redevelopment scenarios. Obstacles to redevelopment One of the challenges in greyfield redevelopment is that the properties tend to carry debt that exceeds their book value. Fleissig estimates that the troubled malls in the study carry a debt of approximately $3.5 billion, but have a book value of only $2.5 billion. Because of the way bad debt is handled in tax policy, the value gap can slow the redevelopment process. The powerful leases held by department store anchors present another serious hurdle. These tenants typically have veto power over any changes in parking ratios, and it is not uncommon for the leases to remain in effect even after a department store has closed its doors. The next phase of the CNU study will focus on developing policies that can help speed the redevelopment of these troubled malls into mixed-use centers.