America is Over-Retailed - Too Many Stores

[Onn]

Originally Posted by Chicago103

Well so many places in America (auto-centric sprawl) lack any type of culture or history to the point that all there is to do (besides either dying of boredom or getting the hell out of SprawlDodge) is mindlessly consume cheap junk from China.

Culture and history have nothing to do with stores or anything. It has nothing to do with economics. I don't get why you guys keep bringing that up. We're talking about retailers here, not necessarily suburban retailers....just retailers in general.

[Policy Wonk]

There are roughly 20 square feet of retail space for every man, woman and child in America.

That was unsustainable during the credit boom, it is pure insanity today.

That is going to come down by at least a third, maybe half.

Although urban vs. suburban doesn't really come into it on a macro level,

[miketoronto]

Those malls in Detroit I don't think are doing very well. I am very familiar with Partridge Creek Mall, and it has except for a couple stores, all the same stores you can find not even a two min drive down the road at Lakeside Mall.

How are they suppose to sustain that? It is not even like these malls are a couple miles away from each other. They are almost next door.

[mhays]

In cities with cheap land, malls are sometimes built with the specific intent of driving other malls out of business.

In the larger West Coast metros that's rare...even if big acreages were available, they'd be too expensive. Our malls tend to renovate rather than become obsolete. Often they expand, and thankfully do so on their existing properties by slightly densifying, primarily by building garages in place of some of their surface parking.

[M II A II R II K]

Wal-Mart Supercenters probably had the same intent. People in small town America said they go there regularly for many things they need.

I joked and said when it opened the whole town got employed.

[mhays]

Wal-Mart CERTAINLY has that intent. Their decisions are predicated on driving everyone else out of business.

Further, they build new stores that kill off their old ones, and then refuse to lease their old ones to other retailers.

[LtBk]

Here in Maryland, no new mall have been built for years. The last mall to be built was the Arundel Mills in Hanover (14 miles south of Baltimore) at 2000. Several malls have closed over the past decade or so, replaced by either big box shopping centers or open air "town center" malls like Hunt Valley. The only mall I know of that was renovated was Towson Town Center in 2008.

[Onn]

Originally Posted by mhays

In cities with cheap land, malls are sometimes built with the specific intent of driving other malls out of business.

In the larger West Coast metros that's rare...even if big acreages were available, they'd be too expensive. Our malls tend to renovate rather than become obsolete. Often they expand, and thankfully do so on their existing properties by slightly densifying, primarily by building garages in place of some of their surface parking.

I don't know about that, but I'm sure the cheap land has something to do with it. Here they're building a massive development on top of a former garbage dump even, which has almost everything (Best Buy, Target, Old Navy, Barns and Noble, Home Depot, Lowes, Meijer, Joann Fabrics...) At another site they tore down a huge mall built in the 60s and replaced it with a Wal-Mart, Target, and a massive gym. I'm sure the land is pretty cheap, no one would use it if the mega chains didn't fill the gap. All the malls have been in serouis decline, people just don't shop at them anymore.

[Chicago Shawn]

Originally Posted by MayDay

One factor that plays into this is if an area's municipalities don't participate in any kind of regional revenue sharing effort.

For example, in Cuyahoga County alone (Greater Cleveland consists of 6 counties which have their own fiefdoms), there are something like 59 different municipalities (38 cities ranging from 10K to 400ishK), each with their own economic agendas and revenue streams. So when one smallish city builds a new shopping center; adjacent cities lose revenue to their neighbor so what do they do to recapture that revenue? Build their own, of course! Play that scenario out and is it any wonder you have strip plazas every other mile, and regional malls within 5 miles of each other? And yes, they often cannibalize off each other, especially in metros with a stagnant or shrinking population.

Ding, Ding, Ding!

This is the main cause of it, combined with cheap and easy credit. Municipalities have engaged in revenue based planning for years, adding sales and property tax generation without adding kids for overburdened suburban boomtown schools. The density of most communities is not high enough to sustain the excess retail in an era of restricted spending. As a result we will see more malls empty out, more strip malls with vacancies and more chains going out of business. Circuit City and Linens n' Things are already two big chain casualties of the economic downturn.

The only places that will see substantial increases in retail are areas that are either undeserved and have major trade leakages to other shopping districts outside of the community, or areas with increasing or already high density. Density= buying power, and even with restrained spending, higher density areas bring more customers to make up the difference. Miami for example saw its downtown retail vacancy rate cut in half as the new condos began filling up with people, and this is during the worst recession since the Great Depression. Chicago is also still opening stores which have followed people to neighborhoods that have seen large amounts of new residential construction.

[Busy Bee]

And to be honest, I don't know how all the stores make a profit. How you can have three Gaps all within 5-10 minutes of each other, and have them all make money seems weird.

You'd be amazed what you can pull of if you make something for $1 and sell it for $30.

[plinko]

Originally Posted by Busy Bee

You'd be amazed what you can pull of if you make something for $1 and sell it for $30.

Except that what you are saying isn't correct at all.

Yes, a T-shirt might cost $1 to manufacture in some far off land (materials + wages + local factory overhead), but then there's the cost of packing, shipping, receiving, distribution + the overhead for all of the people and places that have to touch that same T-shirt along the way. Not to mention then the basic store overhead + the original cost of building/outfitting the store (which is usually a combined capital cost + an amortized lease agreement).

As I mentioned before, I am constantly amazed at the razor thin profit margins at clothing stores. I can't imagine it's that much different for say...Crate & Barrel or even Macy's.

[BTinSF]

Originally Posted by mhays

In cities with cheap land, malls are sometimes built with the specific intent of driving other malls out of business.

In the larger West Coast metros that's rare...even if big acreages were available, they'd be too expensive. Our malls tend to renovate rather than become obsolete. Often they expand, and thankfully do so on their existing properties by slightly densifying, primarily by building garages in place of some of their surface parking.

Well, not always. Consider CityPlace in San Francisco:

The building would contain approximately 375,700 gsf, with about 264,010 gsf of retail uses; about 4,830 gsf of common areas; about 10,900 gsf of mechanical and storage space; and about 95,960 gsf of parking, loading, and circulation space with approximately 188 parking spaces.

Source: http://www.socketsite.com/archives/2...his_after.html

Not only is it new construction, the most controversial thing about it is whether to allow it to have 188 parking spaces (vs. no parking).

But yeah, your main point is valid--it isn't being built to put anyone out of business. If it IS built, the objective would be to provide the inner city with something it now lacks: discount retail along the lines of Target.

[miketoronto]

For all the talk of power centres taking over, malls are not dead. No matter what people still like walking around and going through a number of stores, etc.

The mall near my house is so packed on weekends you can hardly move around.
So the idea that no one ever shops in malls anymore I think is false. You just see a balance between malls and power centres.

[Paradox21]

My biggest personal problem with the over-abundant development of retail is the fact that the rapid geographic dispersal of amenities has often led to an acceleration of sprawl--which of course can lead to lot of negative health, cultural, and environmental effects.

MayDay squarely hit the nail on the head when he illuminated the cannibalizing effect that often results from cities, counties, and other municipalities with competing economic objectives and few fiscal alliances.

Also, I'm not too fond of the fact that free-market capitalism has allowed big box retailers to rapidly devour local institutions at the expense of regional heritage and a more diversified shopping experience, but obviously big box retailers do fulfill a need for many people (including myself) and I suppose there is a price to pay for "lower prices."

...Unfortunately that price is often paid in blood, sweat, and tears- both at home and abroad, but I'll leave it at that to avoid the risk of threadjacking altogether.

[mhays]

Originally Posted by BTinSF

Well, not always. Consider CityPlace in San Francisco:


Source: http://www.socketsite.com/archives/2...his_after.html

Not only is it new construction, the most controversial thing about it is whether to allow it to have 188 parking spaces (vs. no parking).

But yeah, your main point is valid--it isn't being built to put anyone out of business. If it IS built, the objective would be to provide the inner city with something it now lacks: discount retail along the lines of Target.

That's not what I meant. I meant that in dense, growing cities there's no pattern of leapfrogging and abandonment, because the older retail is generally too valuable to abandon. Also that sprawly retail forms don't make sense in a city with expensive land.

There's new construction in my city too. Often my company is the general contractor.

[BTinSF]

Originally Posted by mhays

That's not what I meant. I meant that in dense, growing cities there's no pattern of leapfrogging and abandonment, because the older retail is generally too valuable to abandon. Also that sprawly retail forms don't make sense in a city with expensive land.

There's new construction in my city too. Often my company is the general contractor.

How do you do new construction on occupied land without "abandoning" what's already there (commonly retail as in the case of CityPlace)?

[mhays]

With suburban-type malls, you can relocate some/all of the surface parking into garages and delete surface parking, then build more retail, plus maybe other uses. Sometimes they'll tear down an older portion of the mall and rebuild, possibly in a denser "lifestyle center" format.

[bobdreamz]

^ looks like every commercial road in Orlando!

[Onn]

Originally Posted by miketoronto

For all the talk of power centres taking over, malls are not dead. No matter what people still like walking around and going through a number of stores, etc.

The mall near my house is so packed on weekends you can hardly move around.
So the idea that no one ever shops in malls anymore I think is false. You just see a balance between malls and power centres.

Tronoto is a major city though, much like New York, LA, and Chicago. I would expect malls to do well there. But in the second tier cities and metropolitan areas malls are increasingly in decline. The malls here on the weekends aren't even that busy. People gravitate towards the restaurants and salons, not the stores themselves.

[Qubert]

Originally Posted by Crawford

U.S. suburbia is so over-retailed, it's amazing.

Metro Detroit has basically had a stable population for the last few decades, but it seems like the retail space has tripled during the same period.

Even today, there are WalMarts, Targets and Meijers going up everywhere in Michigan. Major malls are still being built (Partridge Creek Mall) and existing ones are expanded (Twelve Oaks Mall), and new department store chains have entered the market (Parisian, Nordstrom).

How is this possible? Isn't everyone just cannibalizing everyone else? How can you have a stable or declining population and declining incomes, and there are new retailers going up eveywhere?

It's called credit, and the US is up to it's eyeballs in debt on a government, corporate, and personal level. During the last decade, the banks were basically giving money away and now that the music has stopped, the current economic catastrophie is the result.
Leaders, regardless of ideological bent, have used loose credit markets as a way to smokescreen the American public into thinking everything is okay. What happens now that the curtain is off Oz is anyone's guess.


Sorry to get so Off Topic.