America’s dying malls have been a frequent topic of discussion of late as these relics of the 80’s have been forced to convert once valuable high-end retail square footage into grocery stores, libraries and doctor offices just to keep the lights on. Here’s just a small sampling of the recent carnage:
A Third Of All Shopping Malls Are Projected To Close As ‘Space Available’ Signs Go Up All Over America America’s Desperate Mall Owners Turn To Grocers, Doctors & High Schools To Fill Empty Space Failing Malls Turn Empty Parking Lots Into Carnivals To Generate Cash But, as Bloomberg points out today, one other funding source is increasingly emerging as a key financial sponsor in the efforts of commercial REITs to re-purpose their failing assets: taxpayers.
In Brookfield, Wisconsin, for example, the city is using tax-increment financing (TIF), a common tool for municipalities to subsidize development by putting property taxes from new projects into a fund that pays for building cost, to help rebuild the Brookfield Square Mall. Meanwhile, as if that weren’t enough, the city has also agreed to pay for remediation costs related an old Sears auto repair shop and to build a new convention center and hotel where the Sears once stood.
In this depressing landscape, there is at least one player still willing to take the risk: local governments hungry for tax revenues. Developers incorporating additions such as housing and parks in their plans are turning to public partners to help rehabilitate the aging retail meccas that dot the U. S. Public subsidies have been part of retail development for decades, but with landlords pouring billions of dollars into renovation to battle a wave of store closures, public-private partnerships are more urgent, and more fraught, than ever.
This post was published at Zero Hedge on Oct 31, 2017.