Is investing in a mall a good idea?

Depending on these factors, mall investors can generally expect an annual return of 5 to 20%. The benefits of investing in a mall include reliable revenues, favorable tax treatment, simplicity and lower levels of risk when choosing high-quality tenants. That's why malls are great, because the investment is quite safe and the returns are still high. It doesn't get any better than this for investors who want the best.

There was a time when the idea of owning shopping mall REITs (real estate investment trusts) was something that excited me. And just to be clear, there are still plenty of opportunities to enter that particular space. Simon Property Group (SPG -0.56%), for example, has had a good month so far and, as the largest mall operator in the country, there is every reason to believe that it is in a strong position to recover from the pandemic. Prepare for future growth with personalized lending services, succession planning and capital for equipment or business technology.

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Discover the latest figures, news and market movements you should know every week with Ginger Chambless, director of commercial banking research. If you want to successfully invest in a shopping mall, here are a few things to keep in mind. There is a misconception that the pandemic forced most retailers to close. Many stores closed, and only time will tell how retailers who rely on office workers and tourism will fare.

As we emerge from the pandemic, it's a good time to explore these retail opportunities due to the combination of unexpected vacancies, short-term leases, and exchange periods of between 10 and 31 years. It takes up a whopping 46.5 acres of land, making it a lot of wasted and underperforming space that, as mentioned above, is costing the city money in terms of emergency services, not to mention the large number of roads, pipes and power lines that surround the mall. Nor does the company pay the (minimum) property taxes for the mall, which deprives my city of the necessary income and, at the same time, is actively costing it money in the form of emergency personnel and resources sent to respond to recent fires and acts of vandalism. If this trend continues, which is likely to happen, malls could struggle to fill empty spaces and attract replacement tenants.

You will be able to maximize not only the marketing power of the mall as a whole, but also of each of its stores. If the store were successful, you would be fine, but if it weren't, you would collapse and the investment would sink. So what would a business model that didn't depend on huge initial investments in land and buildings, that didn't need millions in government subsidies to survive and didn't return much in taxes, that didn't depend on a couple of department stores to underpin an entire plan that wasn't, in short, financially fragile?. But why visit a mall for variety when you can visit a one-stop-shop instead? Today, large stores are becoming more creative when it comes to establishing partnerships to create store-to-store offerings for customers.

Because of the size of a shopping mall, anything that can improve the space or give it a new life must also be done on a large scale. I'm sure that when it was built in 1972, the mall's developers painted an optimistic picture that it would help improve the area economically. I am saddened that people who live near Northridge and have to keep an eye on it every day, as they are likely to suffer more burglaries and crimes in their own homes, since the mall attracts people who are not up to anything good. People looking to get into trouble just have to cross the meager fence that surrounds the property, and then they can sell drugs, start fires, or anything else they want within the walls of the mall.

Bayshore stands out because it advertises itself as one of the most exclusive malls in the region and is structured as an outdoor mall rather than an enclosed space, two things that differentiate it from places like Northridge. If a mediocre pizza chain and a thrift store are worth hundreds of thousands more than this mall, that should tell us something about how wasteful all this effort has been. .