How private ownership will revive malls
Before us is a massive opportunity to transform and evolve shopping malls into more productive, vibrant, and desirable properties that reemerge as a popular centerpiece of the communities they exist in.
I have had the great fortune of spending my entire professional career--nearly 35 years--in the enclosed shopping mall industry. And I have witnessed tremendous change.
When I started, there were approximately 1,500 malls in existence and at that time, those malls were owned and operated by some 100 privately held, entrepreneurial, real estate development companies that were the original builders. Through the 1990s and into the 2000s, the industry was consolidated to a handful of large public companies (REITs) that came to own the majority of malls. Watching this transformation occur, it became obvious to me that, ultimately, there would be another period of transference of ownership, coming back full circle to private ownership as REITs would prune and right-size their portfolios.
With this realization, I saw the critical need for a truly turnkey operating platform with specific mall “DNA”. Malls are a complicated and nuanced asset class that require skill, experience, and specific expertise to best manage and evolve enclosed shopping malls and large-scale retail-based mixed-use projects. I founded Spinoso Real Estate Group (SREG) to be that expert. Over the last 14 years, we built a highly effective operating platform with an unparalleled track record of success. Our current portfolio includes more than 40 properties from coast to coast and we are growing aggressively.
We believe in the future of malls and as more properties transition to private ownership groups like SREG, the opportunity to unlock the potential of these locations will be realized. It is important to understand that every situation is unique and will require data-driven research and diligence to develop a specific, individualized vision. As we look at a mall property that we acquire or are engaged to transform, we start from a clean slate and a fresh perspective of evaluating what would best serve the community and remain viable in the future. Every project is different and, in that way, our industry is coming full circle.
One result of the mall industry consolidation is malls became homogenized. Most malls had the same or similar mix of tenants with very little differentiation. Many malls became stale and uninviting. As our industry comes full circle, new private groups can reset the basis, bring fresh investment, and transform a property into a unique, fresh, inviting productive place for the community to visit, gather, live, work and play.
Each unique plan requires the ability to curate an exciting mix of stores, dining establishments, entertainment venues, service providers, and other unique components. At Spinoso Real Estate Group, our core competency is leasing and we excel at recruiting the best mix of tenants in our projects, each of which is uniquely designed.
In Santa Fe, N.M., we acquired a mall that was well located, but in major disrepair, and more than 70% vacant. As we studied the market, we developed a vision for the property that included major renovation to the physical plant, re-purposing two vacant department stores, creating a productive Food Hall, adding new dining establishments and a boutique, state-of-the-art Regal Cinema, and completely re-leasing the entire project. We also worked closely with the city of Santa Fe to establish new architectural standards, signage standards and obtained the approvals to develop a 150-key hotel and 200 residential units on the site. The transformation from a vacant, blighted property to a true centerpiece of the community is a rewarding endeavor and we have many projects active from coast-to-coast.
As we announce more acquisitions and third-party assignments in the near future, we are hard at work on another exciting project we recently acquired in the greater Cleveland market called SouthPark Mall. There we are opening local, hands-on restaurant concepts as a part of a new Dining and Entertainment District we are creating. We acquired a vacant department store where we are about to announce a new anchor tenant, the addition of a large-scale entertainment venue, and many new stores as we simultaneously create exciting events, festivals, and gathering opportunities that have reconnected SouthPark Mall to the community.
Our industry is certainly coming full circle, and we appreciate the opportunity to create fantastic places, projects, and prospects for new, emerging, and quality tenants to expand their brand and serve our communities.
Carmen Spinoso is the CEO of Syracuse, NY-based Spinoso Real Estate Group.