The state of the metro Detroit shopping mall
In fact, contrary to the popular notion that brick and mortar retail is dying a slow death at the hands of Amazon.com and online retail in general, data suggests that retail is doing better than it was several years ago.
CoStar Group Inc., a Washington, D.C.-based real estate information service, says that mall vacancy rates in metro Detroit were 8.4 percent in the first quarter of 2013. Last quarter it was 6.7 percent and this quarter it is forecast at 5.5 percent.
“Everyone talks about the Internet and Amazon, and it’s very important, but it’s sort of Donald Trumpian — it’s over-simplifying and making a sound bite out of a complex and much more evolved situation,” he said.
Millennials (the Pew Research Center defines them as those born between 1981 and 1996) tend to have less disposable income because of things like student loan debt and slow wage growth, translating to more budget-oriented shopping.
That has hindered some centers, and once-thriving malls such as Summit Place Mall in Waterford Township and Northland Center in Southfield both face the wrecking ball this year as online shopping has emerged and demographics have shifted.
But malls such as Somerset, Twelve Oaks and Great Lakes Crossing have weathered the onslaught because they offer high-end destination retail and experiences, Taubman said.
For example, two of the region’s four Apple stores are in the Troy and Novi malls. Kate Spade’s only three metro Detroit locations are in those malls. Armani only has shops in Somerset. Detroit-based retailer Shinola has selectively opened stores in Somerset, Great Lakes Crossing and downtown Ann Arbor. Those retailers pull in customers from around the region.
“If you have unique stores that only you provide within the market, then you become the destination.”Joey Agree, CEO of Bloomfield Hills-based retail real estate investment trust Agree Realty Corp., said that in addition to e-commerce, oversaturation of brick-and-mortar retail is another driving factor in the number of retailers being trimmed back. There are 24 square feet of retail space per person in the U.S., compared to 14 in Canada and single-digits in Europe.
ccording to data from the International Council of Shopping Centers, the U.S. congressional districts representing metro Detroit only had a 0.2 percent decline in total leasable enclosed mall and other retail center space between 2017 and 2018, falling from 132.35 million square feet to 132.1 million. And the area actually gained shopping areas, rising from 2,330 to 2,335 in that time period.
“We have 1,000 malls in this country. Will we see the A malls survive and dynamically change? Yes, and we’ll see those malls thrive,” Agree said (see related story, Page 1). “The (Class) C malls, the B- malls that have the Sears and JCPenney’s and Macy’s of the world are going to have significant challenges.”
Malls meet mixed fates
Oakland County has a pair of large sites that will be freed up for redevelopment once their enclosed shopping centers meet their ultimate fate later this year: Demolition.
Al Aceves, executive director of the Southfield Downtown Development Authority, said Northland Center is expected to be demolished by the end of this year, with the process beginning in the second quarter after the city picks a contractor following a request for proposals process. About 1 million square feet of the 1.4 million-square-foot property remain.
The city has been in discussions with three developers, the largest of which is San Diego-based Pacific Medical Buildings, Aceves said.
Crain’s reported in March that the company is looking to partner with various entities — including Ascension Health, the national nonprofit hospital chain based in St. Louis that owns the St. John Providence Health System — to build what it calls a “mega-outpatient community” on the northeast end of the property, Vice President of Development Ben Rosenfeld said at the time. The vision includes urgent care, medical fitness and other health care space.
Aceves also said a pair of smaller retail developers are considering portions of the site off the Lodge Freeway north of Eight Mile Road. He declined to identify them.
Southfield bought the center for $2.4 million, months after it closed, in 2015 and began to demolish it in the fall 2017.
About 18 miles to the north, Southfield-based Ari-El Enterprises Inc. purchased the Summit Place Mall property on the Waterford Township/Pontiac border and plans a mixed-use development with office, flex engineering, research and development, warehouse, distribution and restaurants that could be built on the 74-acre site, which Ari-El paid $3.7 million for in September.
The development is expected to cost $63 million, with $8 million for demolition that’s anticipated to begin in the spring. Roadways and other infrastructure would be built starting in the summer next year and the project would be completed over three-five years ending by December 2023, a township document says.
The 1.4 million-square-foot shopping center was condemned in December 2014.
But Oakland Mall in Troy, which is about 800,000 square feet and sits on 122 acres, remains viable. It’s about 5.5 percent vacant, according to data from CoStar Group.
In recent years, the mall has added a Field & Stream store after a Circuit City was demolished and the outdoor goods retailer took its place. It has also added stores like a St. Julian Winery and a Dick’s Sporting Goods, plus H&M and At Home.
However, the mall last year lost its Sears store as part of the bloodletting that has besieged the former retail giant.
In Wayne County, Eastland Center has an uncertain future but a new owner in Great Neck, N.Y.-based Kohan Retail Investment Group, which placed a winning $3.125 million auction bid for a 640,000-square-foot chunk of the Harper Woods mall last year. Kohan told Crain’s in November that it plans to stabilize the mall by finding new tenants.
And the city is pushing what it calls an “economically sustainable” redevelopment plan which includes replacing the aging mall with a civic campus that includes a new city hall and police department.
However, Kohan has a spotty record with malls in St. Louis, Midland and elsewhere.
Other Wayne County malls such as Fairlane Town Center have been creative in replacing vacated anchor space. Fairlane Town Center, for example, took on Ford Motor Co. as a tenant in the former home of Lord & Taylor across from the automaker’s headquarters in Dearborn. The automaker, which made the move two years in advance of its announcement of plans for a new autonomous and electric vehicle campus in Detroit’s Corktown neighborhood, took 240,000 square feet there.
In Macomb County, Macomb Mall in Roseville on Gratiot Avenue has taken on new life under new ownership.
And Lakeside Mall in Sterling Heights has been talking to developers and redrawing zoning rules for what it anticipates is the eventual demise of the property in favor of more urban, walkable downtown-style retail.
There are two concepts for the mall on Hall Road between Hayes and Schoenherr roads on the table, Crain’s reported last year. The first keeps the fully enclosed mall largely intact and surrounds it with public, residential, medical and office space. The second takes a wrecking ball to the concrete behemoth built in 1976 and replaces it with more of a ground-up redevelopment.
Posted By: Crain’s Detroit Business on February 3, 2019. For more information, please click here to read the source article.
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