Slog
News & ArtsFriday, April 17, 2009
Boom Stop Building Malls
Posted by Dominic Holden on Fri, Apr 17, 2009 at 12:37 PM
The city council will consider whether or not to sell two acres of city streets near Rainier Avenue South and South Dearborn Street (the Goodwill site) to a developer to build a shopping mall this spring. The developer, Darrell Vange, president of Ravenhurst Development, also built Westlake Center. And in case you missed this news from yesterday, here’s how the mall operator behind Wesltake Center is faring:
General Growth Properties, the nation's second-largest mall operator, and with several in Washington state, filed for Chapter 11 bankruptcy protection today after it failed to persuade a majority of its debt holders to give it more time to refinance billions of dollars in debt racked up during the housing boom.In Washington state, General Growth owns Westlake Center in Seattle, Alderwood mall in Lynnwood, Bellis Fair in Bellingham, NorthTown Mall and two other shopping centers in Spokane, and malls in Aberdeen and Kelso.
You know, I’m all gung ho for building stuff in the city. But shopping malls are Petri dishes for dull chain stores, which suffocate small local businesses competing in the same vicinity. Malls also are failing all over the country, even malls in the city. So we shouldn’t be building more auto-oriented malls, and we certainly shouldn’t be building them in the city miles from the new light-rail station. If the city is going to grant special favors to developers (like giving up publicly owned streets), it should happen in places where the city is aggressively targeting growth. A group of folks are mounting an opposition to the mall on the Goodwill site. More on their efforts over here. And others are also piping up.
“You’ve got the city talking out of two sides of its mouth,” says Jenna Egusa Walden, chair of the Othello Neighborhood Association. The resident council, which has operated since 1996, is adapting the area’s planning to accommodate the new Othello light-rail station. “On one hand, the city and the state are telling us that light rail is coming to our neighborhood it is going make it more walkable and livable, and create economic development that is missing,” she says. “And then they support—at least the mayor has—a major retail project off a mile and half off the light rail.”
It’s worth noting that none of the people opposing the mall are anti-development or anti-density. "We are starving for economic development in the Rainier Valley," says Egusa Walden. "Whatever could have happened near the McClellan Street station would be in direct competition with that project." Some of them are developers themselves. But they argue the development at the Dearborn Street site ought to be built to the street grid. To that end, one of the members of the Community Alliance for Responsible Development, Bill Bradburd, worked with the UW to draft several drawings of high-density development for the Dearborn Street site that isn’t a mall. Here's one of them:
2
I'm also a big fan of density, but that area does not need a fucking mall with a Target anchor store. The traffic down there is bad enough. But please, feel free to build big-ass dense mixed income housing with lots of ground floor retail. Pretty please.
3
Um, "traffic" is exactly what retailers need and want. Not to be contrarian or anything, but folks down there might like to have a Target option. Man cannot live by cupcake shops and Quiznos alone.
4
Dominic,
I agree. There must be a moratorium on construction of shopping malls. Especially now, after reading that one of the biggest developers of them filed for bankruptcy this week.
I agree. There must be a moratorium on construction of shopping malls. Especially now, after reading that one of the biggest developers of them filed for bankruptcy this week.
5
@3 I mean traffic as in "Holy fuck I've been stuck on Rainier for 25 minutes traffic". The corner of Deerborn (sp) and Rainier is a monumental bitch for most of the day. I can't see a mall making the situation much better.
6
I am constantly amazed at the Slog's fixation on commercial real estate as represented by shopping malls and the absence of any demonstrated comprehension of the financing that has been required to support commercial real estate. It is absolutely remarkable in
its shallowness. If you really want to start worrying, don't waste your time with shopping malls. Start focusing on the issues that make up the multi-family housing sector of commercial real estate in this country and the impacts we'll start seeing when it starts failing.
its shallowness. If you really want to start worrying, don't waste your time with shopping malls. Start focusing on the issues that make up the multi-family housing sector of commercial real estate in this country and the impacts we'll start seeing when it starts failing.
7
"If the city is going to grant special favors to developers (like giving up publicly owned streets),"
Well that's just being a stone cold liar... In the beginning of your post you said they were going to sell the street - not give it away.
Well that's just being a stone cold liar... In the beginning of your post you said they were going to sell the street - not give it away.
8
hmmmm....i'm being ripped apart by this development; part of me likes parts of it and part of me recognizes the downfalls.
Bad: the traffic in that area is already horrid; this development would make it far worse...a Target is fine, but we don't need a huge strip mall with 20 stores; also, in this economy what other stores are they going to get?...the proposed design is awful...it would kill the individuality of Little Saigon.
Good: yay! A Target within easy traveling distance of Capitol Hill...let's be honest: Little Saigon is a rat infested demi-slum with lots of great cheap restaurants, junky little shops and ugly, old, unsafe, low density buildings and very little residential opportunities.
Bad: the traffic in that area is already horrid; this development would make it far worse...a Target is fine, but we don't need a huge strip mall with 20 stores; also, in this economy what other stores are they going to get?...the proposed design is awful...it would kill the individuality of Little Saigon.
Good: yay! A Target within easy traveling distance of Capitol Hill...let's be honest: Little Saigon is a rat infested demi-slum with lots of great cheap restaurants, junky little shops and ugly, old, unsafe, low density buildings and very little residential opportunities.
9
oh, and two points to make because some people don't seem to understand this project:
1)this is a multi-use project that includes residential as well as retail.
2)this is NOT a traditional enclosed mall development...it'll be a Target with probably a midsize chain and some small stuff...
oh, and that redesign you have pictured on the original post? looks like android Swedes would live/work there...
1)this is a multi-use project that includes residential as well as retail.
2)this is NOT a traditional enclosed mall development...it'll be a Target with probably a midsize chain and some small stuff...
oh, and that redesign you have pictured on the original post? looks like android Swedes would live/work there...
10
When you show up with an A1 front page article in the New York Times ... well, you're really not doing well.
Oh, and Paul Krugman should STFU. Today's article was written while he was going thru PMS or maybe his tree allergies are acting up.
Oh, and Paul Krugman should STFU. Today's article was written while he was going thru PMS or maybe his tree allergies are acting up.
11
To be fair, General Growth Properties' bankruptcy isn't because it's malls are doing poorly, it's because they got fucked by the frozen credit market. Yes, they leveraged too much debt, but that fact has nothing to do with the nature of the mall business.
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@10, your second paragraph is lame, even for you.
@11, malls are in fact doing extremely poorly all over the continent, and that actually has led to unprecedented numbers of shuttered stores and drying-up revenue streams for mall owners like GGP, which doomed revenue streams are the exact reason GGP's creditors during months of discussion kept refusing to renegotiate the debt they held, which is more or less exactly, precisely, in a nutshell why GGP threw in the towel and filed for bankruptcy. Aside from that, of course, you're right.
@11, malls are in fact doing extremely poorly all over the continent, and that actually has led to unprecedented numbers of shuttered stores and drying-up revenue streams for mall owners like GGP, which doomed revenue streams are the exact reason GGP's creditors during months of discussion kept refusing to renegotiate the debt they held, which is more or less exactly, precisely, in a nutshell why GGP threw in the towel and filed for bankruptcy. Aside from that, of course, you're right.
13
Uh, all kinds of retail is suffering, not just malls. There are shuttered storefronts all over Ballard, and Seattle's arterials are solidly lined with boarded-up stores -- or vacant lots -- behind cyclone fences. Capitol Hill's having its problems (seen any paved lots recently?) I'm not sure it's true to categorically say "malls are failing" without looking at what kinds of malls in what kinds of places. "My" mall, Northgate, isn't exactly booming off the charts, but it's doing better than it was a few years ago, I think. U Village is expanded too.
And what they're proposing here isn't what comes to mind when you say "mall". They're not building Southcenter (which is nowhere freaking near here, @1). Not that that means it's good. But you shouldn't automatically reject it out of hand, either.
Similar dilemma just getting under way up in Greenwood, where Fred Meyer wants to tear down their store and the Greenwood Market and build another Ballard-style store -- which is ten times worse than any mall.
And what they're proposing here isn't what comes to mind when you say "mall". They're not building Southcenter (which is nowhere freaking near here, @1). Not that that means it's good. But you shouldn't automatically reject it out of hand, either.
Similar dilemma just getting under way up in Greenwood, where Fred Meyer wants to tear down their store and the Greenwood Market and build another Ballard-style store -- which is ten times worse than any mall.
14
@12 "malls are in fact doing extremely poorly all over the continent"
Then explain Simon Property Group's relative strength... (up 8.15% in the pas 90 days, 45.85% in the past 30 days and continuing to pay out a 90 cent dividend with a 7.3% yield).
Simon, by the way, is the nation's largest mall operator. Perhaps a better indicator of then the nations second largest mall operator.
Then explain Simon Property Group's relative strength... (up 8.15% in the pas 90 days, 45.85% in the past 30 days and continuing to pay out a 90 cent dividend with a 7.3% yield).
Simon, by the way, is the nation's largest mall operator. Perhaps a better indicator of then the nations second largest mall operator.
15
Sure thingy, @14, if ya wanna get all wonky. Fresh from yesterday, a less enthusiastic view of that dividend:
Deutsche Bank AG recently pointed out that both REITs [GGP's mall operator peers Simon and Kimco Realty Corp.], which focus on investing in malls, have announced plans to strengthen their balance sheet by issuing more shares. The problem is that strategy only dilutes the stock and makes the companies payout more in dividends. Deutsche points out that Simon, which is the largest mall owner in the U.S., intends to avoid the scenario somewhat by paying 90% of its dividends in stock, but that obviously causes even more dilution.
It doesn't help Simon and Kimco that the market for retail space in malls like the economy is in a deep funk. Circuit City Stores Inc. and Steve & Barry's LLC, for example, filed for bankruptcy last year and its expected the recession may shutter even more retailers. And with Simon holding $2 billion in debt coming due this year and Kimco with $7.5 billion in overall debt, according to Green Street Advisors Inc., a dwindling revenue base only worsens their prospects for a recovery.
http://www.thedeal.com/dealscape/2009/04…
Deutsche Bank AG recently pointed out that both REITs [GGP's mall operator peers Simon and Kimco Realty Corp.], which focus on investing in malls, have announced plans to strengthen their balance sheet by issuing more shares. The problem is that strategy only dilutes the stock and makes the companies payout more in dividends. Deutsche points out that Simon, which is the largest mall owner in the U.S., intends to avoid the scenario somewhat by paying 90% of its dividends in stock, but that obviously causes even more dilution.
It doesn't help Simon and Kimco that the market for retail space in malls like the economy is in a deep funk. Circuit City Stores Inc. and Steve & Barry's LLC, for example, filed for bankruptcy last year and its expected the recession may shutter even more retailers. And with Simon holding $2 billion in debt coming due this year and Kimco with $7.5 billion in overall debt, according to Green Street Advisors Inc., a dwindling revenue base only worsens their prospects for a recovery.
http://www.thedeal.com/dealscape/2009/04…
16
Amusing, but REITs have had the highest growth in value for the past quarter actually. Among stock groups.
They have to disburse all their earnings, so this might have something to do with it.
They have to disburse all their earnings, so this might have something to do with it.
17
It's too easy to dismiss this as "a mall." It's opponents' favorite canard. Show me another "mall" that has:
1) Mixed-income housing (including 200 affordable units) directly above the retail.
2) A nonprofit social services agency (Goodwill, with not only its retail outlet but training facilities, classrooms and administrative offices).
Also, this development is backed by a coalition of labor, neighborhood groups and business leaders -- from Little Saigon.
http://www.pugetsoundsage.org/article.ph…
There's much more to the story than what The Stranger is "reporting."
1) Mixed-income housing (including 200 affordable units) directly above the retail.
2) A nonprofit social services agency (Goodwill, with not only its retail outlet but training facilities, classrooms and administrative offices).
Also, this development is backed by a coalition of labor, neighborhood groups and business leaders -- from Little Saigon.
http://www.pugetsoundsage.org/article.ph…
There's much more to the story than what The Stranger is "reporting."
18
"Little Saigon is a rat infested demi-slum"
Watch it mate, you'll be charged as a racist for challenging the health standards in Asian restaurants. Afterall, who's ever gotten the shits in Bangkok or the runny farts in Ho Chi Minh City?
Watch it mate, you'll be charged as a racist for challenging the health standards in Asian restaurants. Afterall, who's ever gotten the shits in Bangkok or the runny farts in Ho Chi Minh City?
21
@15...Paying the dividend in stock? Not only does the stock become diluted but one usually has the privledge of paying tax on the capital gains reflected by the price of the stock at the time of distribution. Of course, the likelihood of a stock's price declining as a consequence of the issuance of more shares doesn't help when one is usually relying on the cash dividend to pay that tax. I haven't looked at Simon's balance sheet, however I wonder if they have a lot exposure to repurchase agreements and if they are using any and all avaiable cash to pay these down. Hence the stock in lieu of a cash dividend.
22
A) I love the building in the picture and any building that doesn't look like it's trying to be a family-valuing suburban home is good in my book. Those townhouse things that are all over my old Licton Springs neighborhood give me the worst case of hives. And actually, that design is good beyond just not being shitty. How could anyone object to Swedish androids? They would be hot!
B) How many cars a building adds to Ranier ave will be in direct proportion to how many parking spaces it has. That there is the one thing that should concern the rest of the community. Less parking is better. Any other objection to a building is bullshit. If investors want to lose their money, or if they don't agree that a certain concept is a loser, that's their business.
C) 1.5 miles away from the light rail stop is an easily walkable distance. When people adjust their standards of walkable to something reasonable, this will be obvious to everyone. So this development is as good as on the line for anybody under the age of 80 with a working set of legs.
B) How many cars a building adds to Ranier ave will be in direct proportion to how many parking spaces it has. That there is the one thing that should concern the rest of the community. Less parking is better. Any other objection to a building is bullshit. If investors want to lose their money, or if they don't agree that a certain concept is a loser, that's their business.
C) 1.5 miles away from the light rail stop is an easily walkable distance. When people adjust their standards of walkable to something reasonable, this will be obvious to everyone. So this development is as good as on the line for anybody under the age of 80 with a working set of legs.
23
1.5 miles is nowhere near a "walkable distance" from a light-rail station. Can most people walk that far? Yes. Will they? Of course not, don't be ridiculous. Especially if there's nothing of interest or value to walk PAST.
The pedestrian catchment area for a light-rail station is probably something like 500-800 yards. You appear to be under the impression that you are designing human behavior. You're not.
The pedestrian catchment area for a light-rail station is probably something like 500-800 yards. You appear to be under the impression that you are designing human behavior. You're not.
24
YES PLEASE! A Target people don't need to drive to Northgate to get to!!!
Isn't this close to where the First Hill streetcar will go?
Isn't this close to where the First Hill streetcar will go?
25
Just checked-
A little over 2 blocks from the streetcar that will go up Jackson (possibly by 2012)
A little over 2 blocks from the streetcar that will go up Jackson (possibly by 2012)
26
Folks in South Seattle currently have nothing like a Target or Fred Meyer easily accessible to them. You could say "well, small local retailers could serve them then." But there aren't really retailers in SE Seattle to fill those roles other than some small niche retailers. So there is some benefit to the area to have this development -- as long as it's not a traditional mall surrounded by a giant parking lot, which would be awful.
27
What I don't understand (but am sure someone will explain) is why, with the existence of Sears, "folks in South Seattle have nothing like a Target or Fred Meyer easily accessible to them."
28
Well, I have to admit, I had forgotten that Sears was there (and I was thinking about SE Seattle anyway, not SODO or West Seattle -- which does have a Target). Is it still open? I know there's still a sign on the building, but it kind of looks as if they've been pushed out by Starbucks.
Sears doesn't seem to be an exact equivalent to Fred Meyer/Target, though. Is that a full-fledged Sears with all the departments?
If it is, then when the light rail opens they might get a little boost of business, since they are relatively close to the SODO station.
In the Rainier Valley next to the Safeway (north of Genesee) there is a sign up that says a Ross Dress for Less is moving in. So there is something else, though all discount.
Sears doesn't seem to be an exact equivalent to Fred Meyer/Target, though. Is that a full-fledged Sears with all the departments?
If it is, then when the light rail opens they might get a little boost of business, since they are relatively close to the SODO station.
In the Rainier Valley next to the Safeway (north of Genesee) there is a sign up that says a Ross Dress for Less is moving in. So there is something else, though all discount.
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