London Moeder Advisors (LMA) has joined forces with David Malmuth Development to introduce a practice focused on assisting LMA’s retail-mall clients in redeveloping malls, many of which have become increasingly challenged by a changing retail environment. The Mall Reinvention Program will offer a variety of services including conceptualization of a new mall or changed or adaptive reuse, project management, entitlement, construction management, and disposition.
According to Gary London, a principal with LMA, “Our core strength remains our market-and-feasibility studies, which discover new opportunities for old assets. That sows the seed for mall reinvention. David Malmuth Development carries out the plan without the necessity of risking implementation or sacrificing value to outside developers or selling early, if at all. The result is a significant increase in the value of your asset, a more profitable asset with long-term upside potential.”
Malmuth, president of David Malmuth Development, is a partner with I.D.E.A. Partners, which created the I.D.E.A. District, a redevelopment in Downtown San Diego’s East Village.
LMA says it decided to create this program because, while the hype surrounding the “retail apocalypse” is certainly overblown, it is clear that the effects of a rapidly changing retail landscape are rending many malls irrelevant. Once the “darling” of the real estate investment markets, regional malls are now the least-favored asset class in the 2017 Urban Land Institute rankings. Experts predict that a combination of major store closures and changing consumer shopping habits — particularly the rapid increase of online shopping — will result in 25 percent of the more than 1,000 U.S. malls shuttering by 2022.
London says many of the malls his firm has analyzed can be reinvented. “Uncovering your assets’ new potential is our first job. This may be accomplished by adding new uses. In many instances, we have determined that your asset may be significantly underdeveloped: many include an abundance of surface parking that is no longer required given the broad consensus about the reduced need for parking as malls are now sited in more urban places, and with the specter of autonomous automobiles as a game changer.”
The program will involve three phases: project selection, development strategy, and implementation. Timeline and cost for the program are based on LMA’s time investment and scaled over each phase. Costs are based on agreement in advance. Clients will receive a report summarizing the firm’s analysis, concept development plans and proformas, schedule, and budget generated for the property.
“The retail landscape is not going to get easier, and your competition – including online sales – is not going to relent,” says London. “You can allow these forces to dictate your fate or proactively determine if you can unlock hidden value in your property.”