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Wednesday, October 17, 2012

Can This Mall Be Saved? Need Lower Debt, Deep Pockets

Despite Major Risks, Some Gutsy Owners and Investors Are Hoping To Cash In On Value-Add B-Mall Turnarounds and Repositionings

Last week, CoStar News reported on the daunting challenges faced by hundreds of outmoded malls in remaining relevant in a increasingly Darwinian retail environment. In this, the second of a three-part series, we look at the signs that may signal a mall's days may be numbered, and how some gutsy investors are taking on the challenge of reviving moribund properties. 

According to retail property experts, changes in a couple of key vital signs often provide the first signs that a mall may be in trouble. 

Consistent declines in retail sales per square foot over an extended time is one big warning sign, according to Gerard V. Mason, veteran retail specialist and executive managing director of Savills US. Higher quality class A malls should take in at least $400 per square foot, while a decent B-class mall will yield about $350 a square foot. Any time a mall's sales fall below $300 per square foot, it's likely in very serious trouble, according to Mason. 


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