PREIT: Malls benefit when located near military centers — here’s why
Military installations can have a major impact on local businesses — including shopping malls.
Military bases are becoming hotbeds of economic development for PREIT Real Estate Investment Trust, which has two properties, Jacksonville Mall and Patrick Henry Mall located near such installations.
Jacksonville Mall is located in the heart of Jacksonville, N.C., and is only 15 minutes down the road from Marine Corps Base Camp Lejeune and Air Station New River. There are over 170,000 active and retired military personnel and their families in the area, creating an economic impact of more than $7 billion, noted PREIT.
The Jacksonville Mall has more than 60 stores, entertainment options like AMC Theatres and Glo-Mania Lazer Tag, and many dining options including Moe's Southwest Grill, Red Robin, Tony's Pizza and Chick-fil-A. Offering something for everyone, the center creates a common ground for both retail favorites and small businesses to thrive. With sales per sq. ft. estimated to be $540 and occupancy exceeding 98%, Jacksonville Mall is one of PREIT’s strongest properties.
Patrick Henry Mall, in Newport News, Va., is another one of PREIT’s dominant locations. It is surrounded by seven military installations which employ approximately 150,000 active duty and civilian personnel within the Department of Defense in the Hampton Roads area, with a total population of 1.6 million. The department has created an economy just beyond the fence line that wouldn’t exist otherwise, according to PREIT.
Subhadra Ganguli, a professor of economics and finance at Bloomsburg University, Bloomsburg, Pa., explained why shopping centers near installations do so well.
"Military officers' salaries and pensions will be paid without fail, and their families won't struggle financially as a result of an economic downturn,” Ganguli said. “In addition to increasing the malls' revenues, having a shopping mall that is close to military installations will make the properties more resilient to economic downturns. Regardless of how poorly the economy is doing, government defense spending will always remain the same.”
For more than a decade, Ganguli witnessed firsthand the importance of the presence of the United States’ fifth fleet and naval base in Bahrain. According to the Gulf News, from a study in 2008, the presence of the military and their families contributed $150 million to the Bahrain economy which contributed to 1.5% of Bahrain’s GDP at that time. (This did not include the personal expenditures of the personnel at the base.)
More Advantages
Throughout the United States, veterans and active-duty military personnel play a key role in stimulating local economies just as they do overseas. Military personnel are highly skilled workers, and provide an excellent built-in labor force for the community.
Also, military bases are often located in population centers where there are colleges and universities. Other factors such as great schools and transportation systems make military bases and their surrounding areas a strong focus for major business development.
Military town economies are filled with young men and women who are blessed with consistent paychecks and practically no living expenses. As referenced by Ganguli, even during a recession —when many workers would often be laid off from the private sector — the military (and health care and education) system would continue to operate properly. No member of the military will ever lose their job as a result of an economic downturn.
“Military bases contain and create thousands of government and civilian jobs that are major catalysts for their respective communities and positively impact the lifestyle of locals resident,” said David Wilk, an assistant professor of economics and finance, director of the real estate program at Temple University Fox School of Business and “place-making” economic development consultant to communities and industry practitioner.
Wilk noted that three of the biggest drivers of economic development, innovation, and entrepreneurship in the country are universities, research parks, and military bases. This is highly evident, he added, in communities that include NASA Marshall Space Flight Center in Huntsville, Ala., Florida’s Space Coast, NASA Wallops Island and Newport News, Va., to name a few.
“These innovation and research clusters provide a domino effect from where military members send their kids to school, buy school supplies, plant roots, and own homes in these areas, all of which enhance economic development, demographic growth, job creation, and quality of life,” Wilk said.