PLANO, TX—With Credit Suisse projecting up to 25% of American malls closing during the next five years, brokers see tremendous opportunity to put this kind of real estate back to work at a higher and better use. The failure of the 1980s retail mall configuration could be a breakthrough in that this type of retail reinvention/redevelopment is becoming more commonplace in high-value areas such as North Texas.

One obvious example is Collin Creek Mall, which is under contract by developer Sam Ware of Dreien Opportunity Partners for acquisition this year. Ware's team plans to make subtle changes to the property in the interim while a larger redevelopment is in the planning stages.

One of the brokers on the transaction, Mike Kennedy, senior vice president, Avison Young Dallas, surmises that the Collin Creek Mall could be the next generation of urban redevelopment. The mall's location at a busy intersection in booming Plano is an example of how assets caught flat footed in the changing retail landscape can hold tremendous upside.

“Plano's high-quality growth and rise to national prominence, driven by the massive corporate relocations of Toyota, State Farm, Liberty Mutual, have resulted in the mall being passed over by shoppers while the value of land itself has increased,” Kennedy tells GlobeSt.com. “So when John Schupp (Avison Young Atlanta) and I began working with the owners on the foreclosed but still operating property, they had more than a fading 1980s mall property to work with.”

Schupp and Kennedy's challenge was to illustrate the underlying value and redevelopment potential, and find the right buyer for the property. They used a brokerage plus strategy for undervalued assets that entails working with the owner, city and designers to create redevelopment scenarios that showcase the property's underlying value.

“Simply throwing a listing out there for a property like Collin Creek would be a disservice to the owners, and the community,” Schupp tells GlobeSt.com.

Kennedy and Schupp's strategy evolved from experience, with Shupp bringing extensive retail and project management expertise, and Kennedy bringing development and planning background. Darrell Betts of Avison Young Houston was added to the team to broaden outreach to international prospects and sharpen the listing strategy.

“By bringing in talented planners and using their concepts to model potential returns, we help prospective buyers look past the current state of the property,” Kennedy tells GlobeSt.com. “And by initiating preliminary discussions with the city on its goals for the property, we can introduce a strong game board to prospects when we list it. There is often some degree of public private partnership on redevelopment assets of this size. At a minimum, we like to take an understanding of the city's goals to the market.”

While Collin Creek's location in Plano is a huge plus, the fact remains that it was leapfrogged by walkable mixed-use development that offered a richer experience to customers.

“People used to go shopping and were maybe lured into dining out as well. That dynamic is now reversed,” says Kennedy. “The most vibrant retail in Plano and across the country is centered on entertainment and dining, with a mix of walkable shopping, office, hospitality and residential development. Americans have traveled the world and experienced walkable environments, and we have higher expectations now. Outdoor space is important. It takes a higher level of engagement than the static, artificial mall experience to get us off of our smartphones. I think we illustrated that potential in what we showed to the market. In red hot Plano, corporate campus development could end up being the driver.”

Moreover, mall properties in less dynamic markets can still have upside. Vanderbilt Medical Mall in Nashville was a redevelopment of an existing mall structure that converted the entire second level into a medical plaza, while densifying the retail on the ground level. And the former Windsor Mall in San Antonio was redeveloped into the corporate headquarters for Rackspace, a web-hosting company, sparking redevelopment of the surrounding area. The former Highland Mall in Austin is in the process of being redeveloped into a new campus for Austin Community College, with a mix of office, entertainment, retail and urban apartments in the surrounding parking lots and parcels.

“As the impact of Amazon, as well as the higher expectations of consumers continues, you may be 'going to the mall' and not even know you are there,” Schupp tells GlobeSt.com.

“Simply throwing a listing out there for a property like Collin Creek would be a disservice to the owners, and the community,” Schupp tells GlobeSt.com.

While Collin Creek's location in Plano is a huge plus, the fact remains that it was leapfrogged by walkable mixed-use development that offered a richer experience to customers.

“As the impact of Amazon, as well as the higher expectations of consumers continues, you may be 'going to the mall' and not even know you are there,” Schupp tells GlobeSt.com.

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This is Not Your Mother's Mall

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