15 ms·

Lessons learned from a failing local mall

412 points by oftenwrong 8y ago

stevenwoo 8y ago
Has the prescription described worked anywhere - invest in downtown shops after a mall fails? It does not address people will almost always search for the better price. We had an article about six months ago talking about how Dollar General was swooping into places like this or where even Walmart failed.
- closeparen 8y ago
  Newer malls have done away with cavernous indoor spaces, and are dense pedestrianized downtowns (albeit not always in the city center, and usually with ample free parking garages). They seem to be doing pretty well.
  - ghaff 8y ago
    I’d say they were a mix but they tend to be upscale in any case. But somewhere like Santana Row is as you describe.
    - Avshalom 8y ago
      That's because they're new. The new mall is always more upscale than the old mall.
  - freehunter 8y ago
    Problem is, it can't be a downtown unless there is a nearby uptown. Without residents within walking distance, it's just a shopping mall.
- kurthr 8y ago
  It's not clear that the end of the search for best price is even at BigBox with mail order Amazon/Walmart making their way in. The advantage of a town/city at all is in its density and walkabilty, the ability to windowshop and compare. The US had a lot of investment in that over the last 100 years (e.g. since 1918) until the leveraged sub-urban hypergrowth (and buyouts) of the 70/80s till now. A lot of it seems like reaching for yield (through leverage) in the hope of bringing back the good old days. Certainly, it will be hard to get developers with their control of most city councils to buy into a reinvigorated well policed downtown until it really falls down. They make their money buying cheap, getting sweetheart infrastructure/tax deals and building "upscale" housing/retail on the edges... or the core once it's already gentrifying.
- vinceguidry 8y ago
  That's a good point. The author argues that the small towns of America have frittered away their wealth. His sub-point is to argue that wealth is, well, what exactly? Obviously a vibrant downtown with nice shops is certainly valuable to some people. But economic activity has always chased the faster, newer and cheaper. Asking it to go the other way is a tall task, always has been, always will be. The point of the matter is, we need a lot of stuff. Scaling is still very much something America and the world needs, much more so than nicely landscaped downtowns. I read that article about diapers and just how sophisticated they really are, just how much R&D goes into them and how thin the profit margins are on them. Wanting cheaper diapers won't magically make it so. Americans choose what they want, and asking people to want different things is ultimately saying you're smarter than them. You might want a JC Penney's, but the struggling housewife next door wants a Dollar General if she can't get a Wal-Mart.
  - jessaustin 8y ago
    A Dollar General just opened in a village near here with a population of 91. A few more people live in the countryside outside the village, but double-digit populations are never going to get a Wal-Mart or a downtown shopping district.
- viburnum 8y ago
  Asheville, NC is an example that worked. https://www.planetizen.com/node/53922 https://www.planetizen.com/node/53922 Google will find you lots more.
  - stevenwoo 8y ago
    Thanks wasn't sure of what to use for search terms, examples would have helped the article. This Asheville article indicates that one should encourage more commercial development of more expensive buildings so both property taxes (based on building value) and employees make money downtown and consumer taxes go to the city, I can understand how there is incentive for a business for the latter but not the expensive building part ( how does one motivate a developer to do that over something more economical for an owner?).
banku_brougham 8y ago
This is an amazing article for me who has little perspective on the relevant issues. I now live in a small village satellite of a large city, and see faint signs of a once thriving local community which seems to have disappeared decades ago. Does anyone have some counterpoint to what is discussed?
- closeparen 8y ago
  There’s no reason to think locally owned downtown shops will be competitive with Amazon unless they are so high-end as to be a destination shopping experience.
  - crankylinuxuser 8y ago
    This is the same logic I've heard when 'selling' malls to the local community. The ruthless answer is, 'There will always be someone cheaper and better than you. Just give it time.' Do not forget that capitalism attempts to seek the bottom at all times. Right now, Aliexpress is cheaper than Amazon by a long shot. Ebay is cheaper on certain goods. Other area-specific upstarts are challenging Amazon in their own ways. And Amazon has significant problems with counterfeits everywhere in their supply chain due to gross mismanagement. I would much rather go to a local business, and pay a bit more, than to deal with some of the online businesses. But the deal city and state governments make is to value the $BigCo, and not the small business.
    - jessaustin 8y ago
      Amazon isn't going away anytime soon, but when they do, they won't leave Brainerd a worthless 23-acre mall in their wake.
      - crankylinuxuser 8y ago
        And I would argue that, yes, they would. More and more Amazon Distribution centers are being opened up. I know of 2 offhand from my location within an hour each direction. I don't know exactly how big the facilities are, but I do know they're massive. I also know that they 'process' workers horrendously. Timed bathroom breaks, quick firing over trivial matters. In essence, they make walmart look like a saint with regards to employer practices. Worse yet, the communities fight crazily over getting that Amazon warehouse. 10 year tax abatements are only the beginning of the 'bargains' made on the taxpayers' backs. Donated land is another gimmie, as is subsidy of city-related services. All this is on the hopes that workers will pay tax. And it amounts to a bad deal for everyone, well, except for Amazon.
AuthorizedCust 8y ago
This is an exercise in nostalgia. It's not a prescription for the future. Downtown-centric planning isn't the only valid tool, but it's the only one that New Urbanists seem to know. Where's the intelligentsia for those of us who don't want to live in small boxes, on top of each other, and don't want to live next door to businesses?
- starkruzr 8y ago
  There are no intelligentsia for those people, because that's not a sustainable or healthy way to live long-term.
- kadenshep 8y ago
  >Downtown-centric planning isn't the only valid tool What are the others? >Where's the intelligentsia for those of us who don't want to live in small boxes It's not there because most experienced people in this domain know is a pretty poor way for people to live and architect cities. It needs to be subsidized and take away from the economic productivity of the city centers. As someone who lives in a "small box", I will most likely never leave the city again unless I intend to farm in some way. I spend less material resources living here, all my neighbors are friends and feel like we actually have a community, events are only 10-15 minutes on foot, etc.
  - dahdum 8y ago
    This comes across as rather patronizing, dense city centers are not only way people should live. You accept the trade offs of living in a dense city, but not everyone should be expected to feel the same way about the crime rates, poor schools, traffic, noise pollution, or SF style feces/needle filled streets.
    - icebraining 8y ago
      I agree that not everyone should have to live in city centers, although that raises questions about the cost per capita of public services and who pays for them. But I can assure you that high crime rates, poor schools and SF style feces/needle filled streets are not inevitable characteristics of dense cities. And as someone currently living in a small town with a lot of farm machinery, I can also assure you that noise pollution is unfortunately not exclusive to cities.
nwatson 8y ago
I was always struck from the mid-90s till I left the bay area 5 years ago by that one block of awesome downtown Sunnyvale CA , Murphy St, and the dismal shopping center next to it that must have destroyed 10 or more similar blocks. The shopping center went through several unsuccessful remodels , not sure how it fares now.
- kurthr 8y ago
  Apparently, a lot of that had to do with Prop 13 and various packaged "company sales" to hold the appreciating property as an investment and avoid increased taxes while minimizing cash flow. In the end after multiple bankruptcies (driven by the city council) the land owners needed to make money on their "new" investment to pay taxes. It's full of shops now with lots of Apple and other tech employment next to the Caltrain corridor. It's similar to the corner of 85&ElCamino where the dead Emproium mall sat for 20 years because the landowner paid effectively no taxes on the property while borrowing on the appreciated value. I don't know if it's true that they only sold to Sutter Health because of bad investments during the dot-com boom, but that was the rumor in 2003-4 when it traded hands.
  - DrScump 8y ago
    "...the corner of 85&ElCamino where the dead Emproium mall sat for 20 years because the landowner paid effectively no taxes on the property while borrowing on the appreciated value." Source? In fact, Home Depot had already leased that site for a new, modern store to go in immediately, but the City Council thought it should be reserved for "upscale" retail -- a ludicrous concept that, of course, never happened. Read about the 2000 Measure N controversy. Home Depot stayed in Sunnyvale and expanded to EPA instead. I lived literally a block away at the time.
    - kurthr 8y ago
      I would note that Home Depot was a proposed lease and not a sale, and people were most worried about awful traffic immediately next to the highway interchange (a Santana Row which went in around the same time wouldn't have been better), but 'that was the rumor in 2003-4 when it traded hands' which I guess you didn't hear. I lived closer to caltrain. Edit: If anyone would like a longer reading of the Home Depot kerfuffle- https://www.mv-voice.com/morgue/2002/2002_02_22.hdtimeline.html https://www.mv-voice.com/morgue/2002/2002_02_22.hdtimeline.h...
nchudleigh 8y ago
Well written article really enjoyed it.
martin_drapeau 8y ago
I live in a healthy and safe small neighborhood in Montreal. We walk to local stores some of which are thriving, while others are dying. Quality of life is very high, and the price of homes keep on rising. Thriving local commerces are service oriented: restaurants, pharmacies, grocery stores, hardware stores and dollar stores. Dying stores are product oriented mostly because of online shopping and big retail. I do long for small local retail stores with good prices and products. The only way this could work is for specific verticals. I.e. men’s clothing. I imagine the store would need to be online first with a global recognized brand. The brick and mortor stores in local communities would become presence (a marketing cost, not a profit center). Frank ‘n Oak is an example of that. I would like to see more across more neighborhoods and verticals.
- mooreds 8y ago
  I found it interesting that the author of the post didn't mention online purchases once. In my mind we are going through a shift in purchasing habits just like mail order retailers provided in the early 20th century. Set aside the subsidies to malls. People actually prefer to purchase products online. Selection is better, pricing is better, it is easier to comparison shop, and it is delivered to your home. What's not to like (for many types of products)? If you are in retail, selling the experience and other aspects of an in person interaction that can't be provided by an online retailer is the way to win. Some aspects include: Community involvement Interaction with experts Immediacy Hands on education Cross selling consumables Don't fight the battles of the past, and recognize that this is just one more evolution that the customer wants.
  - PebblesRox 8y ago
    If you’re interested, here are some of Chuck’s thoughts on Amazon: https://www.strongtowns.org/journal/2017/4/24/okay-lets-talk-about-amazon-then?rq=Amazon https://www.strongtowns.org/journal/2017/4/24/okay-lets-talk...
  - parrellel 8y ago
    We probably are going to head further back toward the old catalog mode that is online purchasing. But. It's a drop in the bucket compared to the debt load killing box stores from all the leveraged buyouts, and that has nothing to do with consumer demands. It might have something more to do with corporate raiders running out of factories to raze.
curtis 8y ago
Many smaller cities and towns have suffered the loss of vibrant downtowns, but I can't help but wonder if we are misidentifying the causes. Over the last half-century (probably more) we've seen a big part of the economic base for these small cities and downs either disappear or move away. Agriculture used to play a much bigger role in the economy as a whole, and a particularly large role in the economy of many small towns. And manufacturing used but much more distributed across the country in smaller cities and towns. But a lot of those factories have closed down. As a consequence the tax base in may of these towns and cities didn't go away simply because retail businesses moved out of the city limits. They may have gone away because the entire GDP of the surrounding area dropped. For reference: https://commons.wikimedia.org/wiki/File:Sectors_of_US_Economy_as_Percent_of_GDP_1947-2009.png https://commons.wikimedia.org/wiki/File:Sectors_of_US_Econom...
- rossdavidh 8y ago
  I half-agree. You are correct that, if all of the stuff is made or grown elsewhere, local retail will not be enough to keep the local economy in decent shape. But, that does not mean that the process of consolidating retail into remote (mall) chains that are loosely committed to that community, is not also deeply flawed.
  - curtis 8y ago
    I think it's possible that many towns would have benefited from different policies (and I think that's an interesting subject!), but I still think many of them didn't have any real choice.
    - nine_k 8y ago
      If they had a possibility to develop in a more beneficial way, but could not make that choice, what forced them? Making beneficial choices for local economy and community is basically a job description of local politicians and officials.
  - btown 8y ago
    But if we don't consolidate retail into mall chains that are loosely committed to that community, it will consolidate into even more-impersonal Amazon warehouses! Wal-Mart is not the local-economy defender we wanted, but it's the one it needs right now! ^ very much /s
mindslight 8y ago
The author is characterizing the economic trend as if it were a deliberate choice, and ignoring the specific reasons for that trend. Back when stuff used to be scarce, hard to find information about, and the supply chain needed to push a mass quantity of stuff onto the shelves to induce demand, it made sense to spend hours grazing over the collection in person in stores. Likewise, the margins were high enough to support the overhead of this. Then, the downtown's vibrant selection disappeared for the same reason the malls are now closing up - we no longer need or want to do that. In concert, margins have been getting ever lower while competition has become even more cut throat - eg the modern ability to go into a store to physically browse, and then purchase from somewhere else online before having even left that (money losing) store! So even those who want to browse in person are paying progressively more and more to do so. And keep in mind, all of this local retail wasn't/isn't actually bringing money in to the area! (unless it's the biggest town around, in which case draw your boundary conditions larger) I do personally respect the need for a local economy, and recognize that the dream of efficiency hasn't delivered on its promise [0]. But reminiscing about the time when the consumer-stuff-delivery industry was effectively in its startup phase isn't going to help. [0] I argue it's due to monetary policy that has an explicit goal of nullifying any savings by consumers, but I digress.
- dnomad 8y ago
  Yeah, stuff was never scarce. I don't know where on earth you got that idea. After World War 2 the US stumbled upon the greatest wealth creation machine the planet has ever known, a consumer-driven economy that literally printed trillions of dollars for decades and is still mostly going. Americans have never wanted for stuff for the last 70 years. (There was hiccup with the oil situation there for a bit but that was cleared up.) The issue is that some of the "stuff" Americans wanted was cars and big houses. The country bet big (again to the tune of trillions) buying a crap ton of cars, building endless roads, and building big houses out in the middle of nowhere. It's this model that drove the creation of the uniquely suburban mall. And this was a deliberate choice driven by the government at every level. The history of post-war America is the history of government-subsidized urban sprawl. It was a big mistake and one that the country will be paying for, for the next century. It's simply not sustainable. The economic forces at work here are a consequence of the laws of physics. Big houses and big cars far from the "noisy, dirty" city are expensive. Everything gets cheaper as density goes up. At some point some critical services become practically free due to market volume and competition. (In highly dense Asian cities it's possible to eat decently for $5/day. That's breakfast, lunch and dinner.) The other side of this equation is that American wages have collapsed. Forget growth, forget stagnation, wages are going down and the coming generations will be poorer than their forbearers. So while it was possible for the average Joe in 1965 to afford a big car and a big house far outside the city, 2020 Joe will not be able to do that and eat and have health insurance. And this is where physics kicks in: Americans can no longer afford the entire "exurb lifestyle" that they love so much. Economic success now lies in the city. The lessons to be learned here are not new. They are as old as human civilization. Prosperous empires over-expand and over-build and eventually collapse due to endless war, internal conflicts and better competition. Density wins because it is much, much more efficient (especially in a highly competitive and dynamic globalized economy). And, most importantly, sustainability matters. A lot. Sustainability may be all that matters. Human laws aren't laws at all -- the right lawyer, the right judge, the right bribes can turn most laws into minor obstacles. Every (human) thing can be negotiated. The only laws that can't be broken or subverted, that can't be negotiated or changed, are indeed the laws of physics and biology.
PKop 8y ago
Everything said here could also apply to the manufacturing and industrial base of US, outsourcing these jobs for cheaper manufactured goods... eventually the country can't productively sustain itself and the "lower prices" don't make up for it. Isn't this part of the premise of "locally sourced" food etc? Pay a little bit higher prices to ensure the areas workforce is sustained. I'd say actually the "lower prices" don't make up for lost jobs much sooner than when you start to see multi-national replacements struggle. Many previously employed depend on government assistance so there is an immediate cost, as well as current epidemic levels of opiate addiction and death, partially explained by economic hopelessness.
- tim333 8y ago
  I'm not sure manufacturing is that similar. US output is at near record levels https://fred.stlouisfed.org/series/OUTMS https://fred.stlouisfed.org/series/OUTMS and companies that outsource like Apple are sustaining themselves fine. There is less employment in manufacturing but its probably more down to more efficient manufacturing technology combined with 'peak stuff' https://hackernoon.com/welcome-to-peak-stuff-e699820c7e9b https://hackernoon.com/welcome-to-peak-stuff-e699820c7e9b
guscost 8y ago
For some great video journalism on this subject, check out Dead Mall Series: https://www.youtube.com/playlist?list=PLNz4Un92pGNxQ9vNgmnCx7dwchPJGJ3IQ https://www.youtube.com/playlist?list=PLNz4Un92pGNxQ9vNgmnCx...
- scottmcdot 8y ago
  Yes, was just about to post this. Very good series.
bjt 8y ago
I see a mix of good and bad arguments here. I believe the story of Bon-Ton and Herberger's being over-leveraged. It's happened to a lot of retailers lately (Toys R Us for example). And I'm sympathetic to his claim that they "had a fragile business model, one that was far too responsive to investors far beyond our little city limits." But a few things undermine his argument: 1. He makes a passing reference to Herberger's having "cheaper clothes" compared to the downtown stores, but that's not really doing justice to the fact that the downtown stores went out of business because the local people preferred the prices and products at Herberger's. No one issued an edict saying "there shall be no more mom and pop stores downtown." 2. He complains about Walmart, Target, etc. being "in the neighboring city". But if you look on Google maps, the distance from downtown Brainerd to Walmart is 3 miles. A 7 minute drive. That is not a major inconvenience for residents. It sounds more like sour grapes from a city planner who resents the commercial taxes going to Baxter instead of Brainerd. 3. He mentions the sewer, water, and roads that were built to support the mall location, without identifying who paid for them. Was it the town, or the developer? I'm worried he's trying to puff up his argument by being vague about this.
- closeparen 8y ago
  The idea is that malls are built with public subsidies, publicly financed infrastructure, and unusually permissive development regulations that are not afforded to mom-and-pop shops. Remember that this an anti-car website; in the future it’s trying to build, 3 miles is a big deal.
  - burlesona 8y ago
    It’s not an anti-car website, that’s a poor cariacature.
    - cbcoutinho 8y ago
      I also don't think it's an anti-car website, it's essentially site focused on the financial aspects of small towns, and they're asserting that towns built around cars are poor financial investments for the cities themselves [0]. [0] https://www.strongtowns.org/journal/2012/1/2/the-cost-of-auto-orientation.html https://www.strongtowns.org/journal/2012/1/2/the-cost-of-aut...
Avshalom 8y ago
Meh, my local mall is failing because they built a different local mall that was newer, cleaner, felt brighter and all the stores that could find the money to sign a new lease moved to that one. Then they built another mall didn't put a roof over it and called it a shopping destination...
- ransom1538 8y ago
  Reminds me of this chris rock skit: https://www.youtube.com/watch?v=80Hke7PrdmA https://www.youtube.com/watch?v=80Hke7PrdmA
opencl 8y ago
The core of the argument here seems to be that the current downtown is more 'financially productive' than the mall, but it also seems that the entire reason the downtown is financially productive is that it isn't retail. As the article notes, the downtown retail shops all went out of business decades ago because they weren't making any money. Why would downtown retail magically be super prosperous today if the mall hadn't been built back then? The entire brick and mortar retail industry is collapsing right now. Presumably most of what's left is office space, and of course office space would rake in more money per acre than retail.
- state_less 8y ago
  Why go into an office though? Isn’t business also running into the same overhead with physical space? It costs money to rent this space and much office work is information based now, isn’t it better for most of us to simply stay at home in the Information Age? It’d be nice to make these old malls with well connected roads into places where digital nomads can hang out, live and commune with one another. Add some tiny homes and maker spaces, fiber optic broadband and fast wireless. Put up some solar panels on the roof and by all means, listen for what is coming with the next generation.
burlesona 8y ago
There’s a lot of over-summarizing going on in the comments here. The context you need to understand the Strong Towns argument is that this isn’t an appeal to nostalgia. Rather the author is trying to point out that the transition to the suburban centralized retail model was heavily subsidized by local and state governments, and that it actually hurt the local economy in the end. The problem is that same public infrastructure subsidy program remains the principal model of “economic development” across the US. The main case Strong Towns is trying to make is that the model does not produce returns (ie local tax income less infrastructure maintenance and public service liabilities) that justify the investment, and thus we need to stop using it.
- ourmandave 8y ago
  Just land yourself an Amazon Headquarters and you'll be fine. https://www.cnbc.com/2018/02/22/koch-group-big-tax-breaks-to-lure-amazon-hq2-will-not-pay-off.html https://www.cnbc.com/2018/02/22/koch-group-big-tax-breaks-to...
- endorphone 8y ago
  The "subsidy" argument is usually based on absolutely nothing credible beyond someone saying "money was spent on something that I don't think/no longer think is worthwhile...therefore, subsidy". If that's the basis of this thought piece, minus any credible analysis (and no, saying "a whole retail/business downtown produces more tax income than a single failed mall" is not an analysis), it isn't worth considering. "the model does not produce returns (ie local tax income less infrastructure maintenance and public service liabilities) that justify the investment" It doesn't make this case at all. It alludes to it, as if decades of tax revenue and benefits were imaginary, but it doesn't make a credible case.
  - Retric 8y ago
    Infrastructure like water pipes and roads are expensive to build and maintain. Lower density areas like malls increase these costs. That's fine in boom times, but from pure economics such areas can easily fail. You can say subsidy or situation normal, but the costs are the same either way. Resilience is just a simplification, online retail among other things is killing malls and that's ok. It's trying to fight that trend that's a losing strategy.
ChuckMcM 8y ago
Nice but I wish the author had called out the impact of globalization a bit more strongly. The structure of a Mall or Walmart takes economic output of an area and sends it somewhere else. That mechanism is that people buy stuff for cheap at the department store, a fraction of that money stays in the form of salaries and taxes, and the bulk goes far way to distribution houses and factories somewhere else. If you don't have something pumping money in, it eventually all drains out. When you collapse the entire flow locally so a local factory/tailor making clothes being sold by a local merchant. Then there is a more immediate return of the economic product. Customer buys a suit, that was sold by a store that bought it from a manufacturer, that bought the fabric from a local textile mill, all of which use machines and staff and other factories and tool shops. I am not sure how you balance this sort of thing out.
- URSpider94 8y ago
  That’s nice in principle. In practice, the reason we have the system we have is that it delivers goods to customers much more efficiently than ever. Back when every small town had its own clothing store, customers were paying enough for the clothes that the shopkeeper and his/her staff could lead middle-class lives off of their profits, not to mention all of the people in the nearby factories who made them. We can go back to those times, but consumers will have to decide that they are happy having fewer clothing items, keeping them for much longer, dressing their children in hand-me-downs, and probably still spending a larger portion of their income on clothing than they do now.
  - ChuckMcM 8y ago
    As I read what you wrote, it seems you restate the author’s point (which I agree with). Globalization brought lower prices and greater selection at the cost of the health of the community. Sort of like eating sweetened thing tastes great but you have to watch what it does to your health over time.
  - isostatic 8y ago
    > probably still spending a larger portion of their income on clothing than they do now. As we have spent less of our income on things like food, clothing, etc, and increased our household income dramatically. In 1971 median household income was c. £270/week. In 2001 £420/week, in 2011 £460/week. (figures adjusted for inflation to 2013 levels) In 1971 housing costs were £20/week, in 2001 is was £90 a week, in 2011 £120 a week. Half of that extra money went in housing costs. The big changes in income (especially in normalisation of a second income) from the 70s onwards were swept up in housing. Increase everyone's wages, and we just spend it on the same houses we had before. On the flip side, decrease everyone's wages and the amount we spend on houses will reduce. That benefits everyone apart from wealthy landowners.
draw_down 8y ago
History happens slowly, then all at once.
deleted 8y ago
[deleted]
woolvalley 8y ago
There are urban malls that only take up one downtown block and don't have a sea of parking around them, or any site provided parking at all for that matter. They can be good for those large blocks where the interior of the block is not used efficiently because of the size, since mall shops do not need windows to the outside. Interior urban malls are also great for places where the weather is bad most of the time. With the urban malls you can still have a strip of shops around them on their outsides.
k__ 8y ago
Reminds me somehow Walmart failed in Germany.
dnr 8y ago
Focusing on clothing stores detracts from the overall argument (which I'm mostly sympathetic to) because there's another clear explanation for what happened to these stores, or what might have happened in the alternate universe where the mall had never come: people are just spending a lot less on clothing than they used to. This was on HN not too long ago: https://news.ycombinator.com/item?id=16322720 https://news.ycombinator.com/item?id=16322720 https://www.bloomberg.com/graphics/2018-death-of-clothing/ https://www.bloomberg.com/graphics/2018-death-of-clothing/
scarface74 8y ago
Malls came about because of tax breaks in the 50s. Now that the buildings are completely depreciated, it's not as profitable. http://archive.wilsonquarterly.com/in-essence/why-america-got-malled http://archive.wilsonquarterly.com/in-essence/why-america-go... An investor making a profit from rental of a new building usually avoided all taxes on that income, since the ‘loss’ from depreciation canceled it out. And when the depreciation exceeded profits from the building itself—as it virtually always did in early years—the investor could use the excess ‘loss’ to cut other income taxes." With realestate values going up during the 1950s and ’60s, savvy investors "could build a structure, claim ‘losses’ for several years while enjoying tax-free income, then sell the project for more than they had originally invested."
- lend000 8y ago
  I'm not convinced by this argument -- my understanding is that when you sell property that you have claimed depreciation on, you have to factor in that depreciation to your cost basis. So if I depreciated 50k on a small commercial property I bought for 100k over 20 years and then sold it for 200k, I would be paying taxes on 150k of income. Granted, you could continue to defer these taxes and build wealth with 1031 exchanges, but I'm not sure how depreciation factors into that scenario.
  - scarface74 8y ago
    Yes that's true, but while you're both getting tax benefits before you sell it and you're making money on the appreciating. So you get to "depreciate" an appreciating asset. Even after taxes, it's a win. Besides, the tenants are actually paying down the debt. Your only investment is whatever relatively small down payment you've made. Hopefully tenant rents are enough to pay for upkeep. You don't pay cash for the real estate - you take advantage of leverage and at the most pay 20% out of pocket. While you own the building, the income you make isn't taxed because you can claim depreciation against your income. If you take into account the time value of money, if you take the tax free money and invest that in another long term asset and sell it, then you pay the much lower capital gains tax.
  - eldavido 8y ago
eldavido 8y ago
I generally agree with the article's main thrusts (city living is more "efficient", better/more sustainable infrastructure), but this is a very one-sided view. Sure, cities are more "efficient". They're also more dysfunctional. What you gain in infrastructure use intensity, you give right back to machine politics, failing school systems, outright embezzlement/theft of funds, huge pension problems, entrenched big-city unions, and bad policing. Just watch The Wire if you want to see what it's like. I live in Oakland, CA, which has had, I think 3 or 4 police chiefs, in the past 3 years. Perhaps there's some kind of middle ground. A place that's not some spread-out suburbia where "going into town" is a thing, but not quite SF/NYC-level government problems where building a subway comes at a price of 3.5 BILLION DOLLARS PER MILE. [1] Maybe a city of 1 million is about the right size. [1] https://www.nytimes.com/2017/12/28/nyregion/new-york-subway-construction-costs.html https://www.nytimes.com/2017/12/28/nyregion/new-york-subway-...
tacon 8y ago
Retail is under terrible pressure, and one reason among many is in your pocket[0]: "Consumer income has not changed much since 2006, thus over the last 10 years $190 billion in consumer spending was diverted toward mobile phones. [...] Between phones and their services, this is $340 billion that will not be spent on T-shirts and shoes." [0] http://contrarianedge.com/2017/07/26/not-just-amazons-fault-changing-consumer-habits-killing-old-retail-biz/ http://contrarianedge.com/2017/07/26/not-just-amazons-fault-...
- MoBattah 8y ago
  I think economic commentators often miss this point. Its also why I think any coming recession will leave the tech industry relatively unharmed.
hisforehead 8y ago
Stop buying things. As for rural areas, why not try something new? Delivery by drone, goods exchanges, unstaffed warehouses access through a smartphone, 3d printers, fast book printers. It's time for radically new ideas to save the rural divide.
brownbat 8y ago
I found this 1982 documentary about malls fascinating, describing them as the future of shopping: https://www.youtube.com/watch?v=G2BlyvN6EeI https://www.youtube.com/watch?v=G2BlyvN6EeI On the one hand, the confident forecasting seems silly in hindsight. You had malls for a hot moment and you decided they would last forever? On the other hand, that hindsight is humbling. Things change. What do we know even now? Society changes. Maybe malls will make a stunning comeback in a few decades. I can't imagine how. Vastly cheaper land or package shipping becoming somehow unsustainable, or just the industry cleans house and survives through attrition. Or maybe online retail will be forever. Or maybe it will be displaced by something unthinkable in thirty years. For all I know some AI concierge service will be a strict dictator over all my finances and purchases, and I'll never touch money, I'll just receive a box of things the machine thinks I need each week. Who knows. We had a thirty year trend that some people thought was forever. It ended, now we all feel smug, think we learned some deeper truth about society. StrongTowns is convinced we should (albeit modestly) reinvest in downtowns. I don't know, that's a lot of conviction for me. Sure, maybe? Am I the only one who feels like I know less now than when this all started?
- heurist 8y ago
  Responding to your first question: Owners are trying to turn unsuccessful malls into medical centers, places of worship, offices, schools, etc.
- jonhendry18 8y ago
  "Maybe malls will make a stunning comeback in a few decades. I can't imagine how" They still make some sense in places not blessed with San Diego weather. The problem is, people don't have disposable income to spend at them. (Another problem might be the lack of book, magazine, toy, and music stores. The stores that are left probably have a clientele that is mostly women, and males don't have much reason to visit the mall and spend money.)
burfog 8y ago
What's in a name? That which we call a mall By any other word would sell as well The "downtown" is essentially a mall, but exposed to the elements. No normal mall manager has ever thought "What I really need here is snow, mosquitoes, panhandlers, diesel smoke, traffic jams, or 90-degree weather with 90% humidity." A mall is like downtown, but without those problems. Malls are dying for reasons that are also hurting downtown areas. Online shopping has been mentioned. Another issue is that malls have lost their value as a social meeting place. People used to go to the mall to meet each other. Teens especially did this, causing them to buy things and to bring in parents with the serious money. Now people spend time at home poking at their cell phones; this is how people connect.
adamw2k 8y ago
Really thinking Jetsons here, but won't we simply be able to print most items either at home or at the neighborhood print shop at some point in the next 100 years? I recall efforts in the food, metal, and body part space. Shipping and warehouses become irrelevant, you just buy recipes that can be created in a very short time. Or maybe I'm living on Cloud 9?
jonhendry18 8y ago
Two things I didn't see mentioned: stagnant wages and rising healthcare costs. I don't think it's a coincidence that malls, especially non-upscale malls, are dying at the same time there's a proliferation of dollar stores and thrift store chains like Savers (basically a for-profit Goodwill). Near a mall where I live there once was a Circuit City. Now there's a dollar store and a Savers. Malls are failing because we simply don't have as much disposable income as we had in the 80s and 90s. The malls that seem to be doing well are the upscale malls whose clientele still have plenty of disposable income.

412 points by oftenwrong 8y ago

Has the prescription described worked anywhere - invest in downtown shops after a mall fails? It does not address people will almost always search for the better price. We had an article about six months ago talking about how Dollar General was swooping into places like this or where even Walmart failed.

closeparen 8y ago
Newer malls have done away with cavernous indoor spaces, and are dense pedestrianized downtowns (albeit not always in the city center, and usually with ample free parking garages). They seem to be doing pretty well.
- ghaff 8y ago
  I’d say they were a mix but they tend to be upscale in any case. But somewhere like Santana Row is as you describe.
  - Avshalom 8y ago
    That's because they're new. The new mall is always more upscale than the old mall.
- freehunter 8y ago
  Problem is, it can't be a downtown unless there is a nearby uptown. Without residents within walking distance, it's just a shopping mall.
kurthr 8y ago
It's not clear that the end of the search for best price is even at BigBox with mail order Amazon/Walmart making their way in. The advantage of a town/city at all is in its density and walkabilty, the ability to windowshop and compare. The US had a lot of investment in that over the last 100 years (e.g. since 1918) until the leveraged sub-urban hypergrowth (and buyouts) of the 70/80s till now. A lot of it seems like reaching for yield (through leverage) in the hope of bringing back the good old days. Certainly, it will be hard to get developers with their control of most city councils to buy into a reinvigorated well policed downtown until it really falls down. They make their money buying cheap, getting sweetheart infrastructure/tax deals and building "upscale" housing/retail on the edges... or the core once it's already gentrifying.
vinceguidry 8y ago
That's a good point. The author argues that the small towns of America have frittered away their wealth. His sub-point is to argue that wealth is, well, what exactly? Obviously a vibrant downtown with nice shops is certainly valuable to some people. But economic activity has always chased the faster, newer and cheaper. Asking it to go the other way is a tall task, always has been, always will be. The point of the matter is, we need a lot of stuff. Scaling is still very much something America and the world needs, much more so than nicely landscaped downtowns. I read that article about diapers and just how sophisticated they really are, just how much R&D goes into them and how thin the profit margins are on them. Wanting cheaper diapers won't magically make it so. Americans choose what they want, and asking people to want different things is ultimately saying you're smarter than them. You might want a JC Penney's, but the struggling housewife next door wants a Dollar General if she can't get a Wal-Mart.
- jessaustin 8y ago
  A Dollar General just opened in a village near here with a population of 91. A few more people live in the countryside outside the village, but double-digit populations are never going to get a Wal-Mart or a downtown shopping district.
viburnum 8y ago
Asheville, NC is an example that worked. https://www.planetizen.com/node/53922 https://www.planetizen.com/node/53922 Google will find you lots more.
- stevenwoo 8y ago
  Thanks wasn't sure of what to use for search terms, examples would have helped the article. This Asheville article indicates that one should encourage more commercial development of more expensive buildings so both property taxes (based on building value) and employees make money downtown and consumer taxes go to the city, I can understand how there is incentive for a business for the latter but not the expensive building part ( how does one motivate a developer to do that over something more economical for an owner?).

banku_brougham 8y ago

This is an amazing article for me who has little perspective on the relevant issues. I now live in a small village satellite of a large city, and see faint signs of a once thriving local community which seems to have disappeared decades ago. Does anyone have some counterpoint to what is discussed?

closeparen 8y ago
There’s no reason to think locally owned downtown shops will be competitive with Amazon unless they are so high-end as to be a destination shopping experience.
- crankylinuxuser 8y ago
  This is the same logic I've heard when 'selling' malls to the local community. The ruthless answer is, 'There will always be someone cheaper and better than you. Just give it time.' Do not forget that capitalism attempts to seek the bottom at all times. Right now, Aliexpress is cheaper than Amazon by a long shot. Ebay is cheaper on certain goods. Other area-specific upstarts are challenging Amazon in their own ways. And Amazon has significant problems with counterfeits everywhere in their supply chain due to gross mismanagement. I would much rather go to a local business, and pay a bit more, than to deal with some of the online businesses. But the deal city and state governments make is to value the $BigCo, and not the small business.
  - jessaustin 8y ago
    Amazon isn't going away anytime soon, but when they do, they won't leave Brainerd a worthless 23-acre mall in their wake.
    - crankylinuxuser 8y ago
      And I would argue that, yes, they would. More and more Amazon Distribution centers are being opened up. I know of 2 offhand from my location within an hour each direction. I don't know exactly how big the facilities are, but I do know they're massive. I also know that they 'process' workers horrendously. Timed bathroom breaks, quick firing over trivial matters. In essence, they make walmart look like a saint with regards to employer practices. Worse yet, the communities fight crazily over getting that Amazon warehouse. 10 year tax abatements are only the beginning of the 'bargains' made on the taxpayers' backs. Donated land is another gimmie, as is subsidy of city-related services. All this is on the hopes that workers will pay tax. And it amounts to a bad deal for everyone, well, except for Amazon.

AuthorizedCust 8y ago

This is an exercise in nostalgia. It's not a prescription for the future. Downtown-centric planning isn't the only valid tool, but it's the only one that New Urbanists seem to know. Where's the intelligentsia for those of us who don't want to live in small boxes, on top of each other, and don't want to live next door to businesses?

starkruzr 8y ago
There are no intelligentsia for those people, because that's not a sustainable or healthy way to live long-term.
kadenshep 8y ago
>Downtown-centric planning isn't the only valid tool What are the others? >Where's the intelligentsia for those of us who don't want to live in small boxes It's not there because most experienced people in this domain know is a pretty poor way for people to live and architect cities. It needs to be subsidized and take away from the economic productivity of the city centers. As someone who lives in a "small box", I will most likely never leave the city again unless I intend to farm in some way. I spend less material resources living here, all my neighbors are friends and feel like we actually have a community, events are only 10-15 minutes on foot, etc.
- dahdum 8y ago
  This comes across as rather patronizing, dense city centers are not only way people should live. You accept the trade offs of living in a dense city, but not everyone should be expected to feel the same way about the crime rates, poor schools, traffic, noise pollution, or SF style feces/needle filled streets.
  - icebraining 8y ago
    I agree that not everyone should have to live in city centers, although that raises questions about the cost per capita of public services and who pays for them. But I can assure you that high crime rates, poor schools and SF style feces/needle filled streets are not inevitable characteristics of dense cities. And as someone currently living in a small town with a lot of farm machinery, I can also assure you that noise pollution is unfortunately not exclusive to cities.

nwatson 8y ago

I was always struck from the mid-90s till I left the bay area 5 years ago by that one block of awesome downtown Sunnyvale CA , Murphy St, and the dismal shopping center next to it that must have destroyed 10 or more similar blocks. The shopping center went through several unsuccessful remodels , not sure how it fares now.

kurthr 8y ago
Apparently, a lot of that had to do with Prop 13 and various packaged "company sales" to hold the appreciating property as an investment and avoid increased taxes while minimizing cash flow. In the end after multiple bankruptcies (driven by the city council) the land owners needed to make money on their "new" investment to pay taxes. It's full of shops now with lots of Apple and other tech employment next to the Caltrain corridor. It's similar to the corner of 85&ElCamino where the dead Emproium mall sat for 20 years because the landowner paid effectively no taxes on the property while borrowing on the appreciated value. I don't know if it's true that they only sold to Sutter Health because of bad investments during the dot-com boom, but that was the rumor in 2003-4 when it traded hands.
- DrScump 8y ago
  "...the corner of 85&ElCamino where the dead Emproium mall sat for 20 years because the landowner paid effectively no taxes on the property while borrowing on the appreciated value." Source? In fact, Home Depot had already leased that site for a new, modern store to go in immediately, but the City Council thought it should be reserved for "upscale" retail -- a ludicrous concept that, of course, never happened. Read about the 2000 Measure N controversy. Home Depot stayed in Sunnyvale and expanded to EPA instead. I lived literally a block away at the time.
  - kurthr 8y ago
    I would note that Home Depot was a proposed lease and not a sale, and people were most worried about awful traffic immediately next to the highway interchange (a Santana Row which went in around the same time wouldn't have been better), but 'that was the rumor in 2003-4 when it traded hands' which I guess you didn't hear. I lived closer to caltrain. Edit: If anyone would like a longer reading of the Home Depot kerfuffle- https://www.mv-voice.com/morgue/2002/2002_02_22.hdtimeline.html https://www.mv-voice.com/morgue/2002/2002_02_22.hdtimeline.h...

nchudleigh 8y ago

Well written article really enjoyed it.

martin_drapeau 8y ago

I live in a healthy and safe small neighborhood in Montreal. We walk to local stores some of which are thriving, while others are dying. Quality of life is very high, and the price of homes keep on rising. Thriving local commerces are service oriented: restaurants, pharmacies, grocery stores, hardware stores and dollar stores. Dying stores are product oriented mostly because of online shopping and big retail. I do long for small local retail stores with good prices and products. The only way this could work is for specific verticals. I.e. men’s clothing. I imagine the store would need to be online first with a global recognized brand. The brick and mortor stores in local communities would become presence (a marketing cost, not a profit center). Frank ‘n Oak is an example of that. I would like to see more across more neighborhoods and verticals.

mooreds 8y ago
I found it interesting that the author of the post didn't mention online purchases once. In my mind we are going through a shift in purchasing habits just like mail order retailers provided in the early 20th century. Set aside the subsidies to malls. People actually prefer to purchase products online. Selection is better, pricing is better, it is easier to comparison shop, and it is delivered to your home. What's not to like (for many types of products)? If you are in retail, selling the experience and other aspects of an in person interaction that can't be provided by an online retailer is the way to win. Some aspects include: Community involvement Interaction with experts Immediacy Hands on education Cross selling consumables Don't fight the battles of the past, and recognize that this is just one more evolution that the customer wants.
- PebblesRox 8y ago
  If you’re interested, here are some of Chuck’s thoughts on Amazon: https://www.strongtowns.org/journal/2017/4/24/okay-lets-talk-about-amazon-then?rq=Amazon https://www.strongtowns.org/journal/2017/4/24/okay-lets-talk...
- parrellel 8y ago
  We probably are going to head further back toward the old catalog mode that is online purchasing. But. It's a drop in the bucket compared to the debt load killing box stores from all the leveraged buyouts, and that has nothing to do with consumer demands. It might have something more to do with corporate raiders running out of factories to raze.

curtis 8y ago

Many smaller cities and towns have suffered the loss of vibrant downtowns, but I can't help but wonder if we are misidentifying the causes. Over the last half-century (probably more) we've seen a big part of the economic base for these small cities and downs either disappear or move away. Agriculture used to play a much bigger role in the economy as a whole, and a particularly large role in the economy of many small towns. And manufacturing used but much more distributed across the country in smaller cities and towns. But a lot of those factories have closed down. As a consequence the tax base in may of these towns and cities didn't go away simply because retail businesses moved out of the city limits. They may have gone away because the entire GDP of the surrounding area dropped. For reference: https://commons.wikimedia.org/wiki/File:Sectors_of_US_Economy_as_Percent_of_GDP_1947-2009.png https://commons.wikimedia.org/wiki/File:Sectors_of_US_Econom...

rossdavidh 8y ago
I half-agree. You are correct that, if all of the stuff is made or grown elsewhere, local retail will not be enough to keep the local economy in decent shape. But, that does not mean that the process of consolidating retail into remote (mall) chains that are loosely committed to that community, is not also deeply flawed.
- curtis 8y ago
  I think it's possible that many towns would have benefited from different policies (and I think that's an interesting subject!), but I still think many of them didn't have any real choice.
  - nine_k 8y ago
    If they had a possibility to develop in a more beneficial way, but could not make that choice, what forced them? Making beneficial choices for local economy and community is basically a job description of local politicians and officials.
- btown 8y ago
  But if we don't consolidate retail into mall chains that are loosely committed to that community, it will consolidate into even more-impersonal Amazon warehouses! Wal-Mart is not the local-economy defender we wanted, but it's the one it needs right now! ^ very much /s

mindslight 8y ago

The author is characterizing the economic trend as if it were a deliberate choice, and ignoring the specific reasons for that trend. Back when stuff used to be scarce, hard to find information about, and the supply chain needed to push a mass quantity of stuff onto the shelves to induce demand, it made sense to spend hours grazing over the collection in person in stores. Likewise, the margins were high enough to support the overhead of this. Then, the downtown's vibrant selection disappeared for the same reason the malls are now closing up - we no longer need or want to do that. In concert, margins have been getting ever lower while competition has become even more cut throat - eg the modern ability to go into a store to physically browse, and then purchase from somewhere else online before having even left that (money losing) store! So even those who want to browse in person are paying progressively more and more to do so. And keep in mind, all of this local retail wasn't/isn't actually bringing money in to the area! (unless it's the biggest town around, in which case draw your boundary conditions larger) I do personally respect the need for a local economy, and recognize that the dream of efficiency hasn't delivered on its promise [0]. But reminiscing about the time when the consumer-stuff-delivery industry was effectively in its startup phase isn't going to help. [0] I argue it's due to monetary policy that has an explicit goal of nullifying any savings by consumers, but I digress.

dnomad 8y ago
Yeah, stuff was never scarce. I don't know where on earth you got that idea. After World War 2 the US stumbled upon the greatest wealth creation machine the planet has ever known, a consumer-driven economy that literally printed trillions of dollars for decades and is still mostly going. Americans have never wanted for stuff for the last 70 years. (There was hiccup with the oil situation there for a bit but that was cleared up.) The issue is that some of the "stuff" Americans wanted was cars and big houses. The country bet big (again to the tune of trillions) buying a crap ton of cars, building endless roads, and building big houses out in the middle of nowhere. It's this model that drove the creation of the uniquely suburban mall. And this was a deliberate choice driven by the government at every level. The history of post-war America is the history of government-subsidized urban sprawl. It was a big mistake and one that the country will be paying for, for the next century. It's simply not sustainable. The economic forces at work here are a consequence of the laws of physics. Big houses and big cars far from the "noisy, dirty" city are expensive. Everything gets cheaper as density goes up. At some point some critical services become practically free due to market volume and competition. (In highly dense Asian cities it's possible to eat decently for $5/day. That's breakfast, lunch and dinner.) The other side of this equation is that American wages have collapsed. Forget growth, forget stagnation, wages are going down and the coming generations will be poorer than their forbearers. So while it was possible for the average Joe in 1965 to afford a big car and a big house far outside the city, 2020 Joe will not be able to do that and eat and have health insurance. And this is where physics kicks in: Americans can no longer afford the entire "exurb lifestyle" that they love so much. Economic success now lies in the city. The lessons to be learned here are not new. They are as old as human civilization. Prosperous empires over-expand and over-build and eventually collapse due to endless war, internal conflicts and better competition. Density wins because it is much, much more efficient (especially in a highly competitive and dynamic globalized economy). And, most importantly, sustainability matters. A lot. Sustainability may be all that matters. Human laws aren't laws at all -- the right lawyer, the right judge, the right bribes can turn most laws into minor obstacles. Every (human) thing can be negotiated. The only laws that can't be broken or subverted, that can't be negotiated or changed, are indeed the laws of physics and biology.

PKop 8y ago

Everything said here could also apply to the manufacturing and industrial base of US, outsourcing these jobs for cheaper manufactured goods... eventually the country can't productively sustain itself and the "lower prices" don't make up for it. Isn't this part of the premise of "locally sourced" food etc? Pay a little bit higher prices to ensure the areas workforce is sustained. I'd say actually the "lower prices" don't make up for lost jobs much sooner than when you start to see multi-national replacements struggle. Many previously employed depend on government assistance so there is an immediate cost, as well as current epidemic levels of opiate addiction and death, partially explained by economic hopelessness.

tim333 8y ago
I'm not sure manufacturing is that similar. US output is at near record levels https://fred.stlouisfed.org/series/OUTMS https://fred.stlouisfed.org/series/OUTMS and companies that outsource like Apple are sustaining themselves fine. There is less employment in manufacturing but its probably more down to more efficient manufacturing technology combined with 'peak stuff' https://hackernoon.com/welcome-to-peak-stuff-e699820c7e9b https://hackernoon.com/welcome-to-peak-stuff-e699820c7e9b

guscost 8y ago

For some great video journalism on this subject, check out Dead Mall Series: https://www.youtube.com/playlist?list=PLNz4Un92pGNxQ9vNgmnCx7dwchPJGJ3IQ https://www.youtube.com/playlist?list=PLNz4Un92pGNxQ9vNgmnCx...

scottmcdot 8y ago
Yes, was just about to post this. Very good series.

bjt 8y ago

I see a mix of good and bad arguments here. I believe the story of Bon-Ton and Herberger's being over-leveraged. It's happened to a lot of retailers lately (Toys R Us for example). And I'm sympathetic to his claim that they "had a fragile business model, one that was far too responsive to investors far beyond our little city limits." But a few things undermine his argument: 1. He makes a passing reference to Herberger's having "cheaper clothes" compared to the downtown stores, but that's not really doing justice to the fact that the downtown stores went out of business because the local people preferred the prices and products at Herberger's. No one issued an edict saying "there shall be no more mom and pop stores downtown." 2. He complains about Walmart, Target, etc. being "in the neighboring city". But if you look on Google maps, the distance from downtown Brainerd to Walmart is 3 miles. A 7 minute drive. That is not a major inconvenience for residents. It sounds more like sour grapes from a city planner who resents the commercial taxes going to Baxter instead of Brainerd. 3. He mentions the sewer, water, and roads that were built to support the mall location, without identifying who paid for them. Was it the town, or the developer? I'm worried he's trying to puff up his argument by being vague about this.

closeparen 8y ago
The idea is that malls are built with public subsidies, publicly financed infrastructure, and unusually permissive development regulations that are not afforded to mom-and-pop shops. Remember that this an anti-car website; in the future it’s trying to build, 3 miles is a big deal.
- burlesona 8y ago
  It’s not an anti-car website, that’s a poor cariacature.
  - cbcoutinho 8y ago
    I also don't think it's an anti-car website, it's essentially site focused on the financial aspects of small towns, and they're asserting that towns built around cars are poor financial investments for the cities themselves [0]. [0] https://www.strongtowns.org/journal/2012/1/2/the-cost-of-auto-orientation.html https://www.strongtowns.org/journal/2012/1/2/the-cost-of-aut...

Avshalom 8y ago

Meh, my local mall is failing because they built a different local mall that was newer, cleaner, felt brighter and all the stores that could find the money to sign a new lease moved to that one. Then they built another mall didn't put a roof over it and called it a shopping destination...

ransom1538 8y ago
Reminds me of this chris rock skit: https://www.youtube.com/watch?v=80Hke7PrdmA https://www.youtube.com/watch?v=80Hke7PrdmA

opencl 8y ago

The core of the argument here seems to be that the current downtown is more 'financially productive' than the mall, but it also seems that the entire reason the downtown is financially productive is that it isn't retail. As the article notes, the downtown retail shops all went out of business decades ago because they weren't making any money. Why would downtown retail magically be super prosperous today if the mall hadn't been built back then? The entire brick and mortar retail industry is collapsing right now. Presumably most of what's left is office space, and of course office space would rake in more money per acre than retail.

state_less 8y ago
Why go into an office though? Isn’t business also running into the same overhead with physical space? It costs money to rent this space and much office work is information based now, isn’t it better for most of us to simply stay at home in the Information Age? It’d be nice to make these old malls with well connected roads into places where digital nomads can hang out, live and commune with one another. Add some tiny homes and maker spaces, fiber optic broadband and fast wireless. Put up some solar panels on the roof and by all means, listen for what is coming with the next generation.

burlesona 8y ago

There’s a lot of over-summarizing going on in the comments here. The context you need to understand the Strong Towns argument is that this isn’t an appeal to nostalgia. Rather the author is trying to point out that the transition to the suburban centralized retail model was heavily subsidized by local and state governments, and that it actually hurt the local economy in the end. The problem is that same public infrastructure subsidy program remains the principal model of “economic development” across the US. The main case Strong Towns is trying to make is that the model does not produce returns (ie local tax income less infrastructure maintenance and public service liabilities) that justify the investment, and thus we need to stop using it.

ourmandave 8y ago
Just land yourself an Amazon Headquarters and you'll be fine. https://www.cnbc.com/2018/02/22/koch-group-big-tax-breaks-to-lure-amazon-hq2-will-not-pay-off.html https://www.cnbc.com/2018/02/22/koch-group-big-tax-breaks-to...
endorphone 8y ago
The "subsidy" argument is usually based on absolutely nothing credible beyond someone saying "money was spent on something that I don't think/no longer think is worthwhile...therefore, subsidy". If that's the basis of this thought piece, minus any credible analysis (and no, saying "a whole retail/business downtown produces more tax income than a single failed mall" is not an analysis), it isn't worth considering. "the model does not produce returns (ie local tax income less infrastructure maintenance and public service liabilities) that justify the investment" It doesn't make this case at all. It alludes to it, as if decades of tax revenue and benefits were imaginary, but it doesn't make a credible case.
- Retric 8y ago
  Infrastructure like water pipes and roads are expensive to build and maintain. Lower density areas like malls increase these costs. That's fine in boom times, but from pure economics such areas can easily fail. You can say subsidy or situation normal, but the costs are the same either way. Resilience is just a simplification, online retail among other things is killing malls and that's ok. It's trying to fight that trend that's a losing strategy.

ChuckMcM 8y ago

Nice but I wish the author had called out the impact of globalization a bit more strongly. The structure of a Mall or Walmart takes economic output of an area and sends it somewhere else. That mechanism is that people buy stuff for cheap at the department store, a fraction of that money stays in the form of salaries and taxes, and the bulk goes far way to distribution houses and factories somewhere else. If you don't have something pumping money in, it eventually all drains out. When you collapse the entire flow locally so a local factory/tailor making clothes being sold by a local merchant. Then there is a more immediate return of the economic product. Customer buys a suit, that was sold by a store that bought it from a manufacturer, that bought the fabric from a local textile mill, all of which use machines and staff and other factories and tool shops. I am not sure how you balance this sort of thing out.

URSpider94 8y ago
That’s nice in principle. In practice, the reason we have the system we have is that it delivers goods to customers much more efficiently than ever. Back when every small town had its own clothing store, customers were paying enough for the clothes that the shopkeeper and his/her staff could lead middle-class lives off of their profits, not to mention all of the people in the nearby factories who made them. We can go back to those times, but consumers will have to decide that they are happy having fewer clothing items, keeping them for much longer, dressing their children in hand-me-downs, and probably still spending a larger portion of their income on clothing than they do now.
- ChuckMcM 8y ago
  As I read what you wrote, it seems you restate the author’s point (which I agree with). Globalization brought lower prices and greater selection at the cost of the health of the community. Sort of like eating sweetened thing tastes great but you have to watch what it does to your health over time.
- isostatic 8y ago
  > probably still spending a larger portion of their income on clothing than they do now. As we have spent less of our income on things like food, clothing, etc, and increased our household income dramatically. In 1971 median household income was c. £270/week. In 2001 £420/week, in 2011 £460/week. (figures adjusted for inflation to 2013 levels) In 1971 housing costs were £20/week, in 2001 is was £90 a week, in 2011 £120 a week. Half of that extra money went in housing costs. The big changes in income (especially in normalisation of a second income) from the 70s onwards were swept up in housing. Increase everyone's wages, and we just spend it on the same houses we had before. On the flip side, decrease everyone's wages and the amount we spend on houses will reduce. That benefits everyone apart from wealthy landowners.

draw_down 8y ago

History happens slowly, then all at once.

deleted 8y ago

[deleted]

woolvalley 8y ago

There are urban malls that only take up one downtown block and don't have a sea of parking around them, or any site provided parking at all for that matter. They can be good for those large blocks where the interior of the block is not used efficiently because of the size, since mall shops do not need windows to the outside. Interior urban malls are also great for places where the weather is bad most of the time. With the urban malls you can still have a strip of shops around them on their outsides.

k__ 8y ago

Reminds me somehow Walmart failed in Germany.

dnr 8y ago

Focusing on clothing stores detracts from the overall argument (which I'm mostly sympathetic to) because there's another clear explanation for what happened to these stores, or what might have happened in the alternate universe where the mall had never come: people are just spending a lot less on clothing than they used to. This was on HN not too long ago: https://news.ycombinator.com/item?id=16322720 https://news.ycombinator.com/item?id=16322720 https://www.bloomberg.com/graphics/2018-death-of-clothing/ https://www.bloomberg.com/graphics/2018-death-of-clothing/

scarface74 8y ago

Malls came about because of tax breaks in the 50s. Now that the buildings are completely depreciated, it's not as profitable. http://archive.wilsonquarterly.com/in-essence/why-america-got-malled http://archive.wilsonquarterly.com/in-essence/why-america-go... An investor making a profit from rental of a new building usually avoided all taxes on that income, since the ‘loss’ from depreciation canceled it out. And when the depreciation exceeded profits from the building itself—as it virtually always did in early years—the investor could use the excess ‘loss’ to cut other income taxes." With realestate values going up during the 1950s and ’60s, savvy investors "could build a structure, claim ‘losses’ for several years while enjoying tax-free income, then sell the project for more than they had originally invested."

lend000 8y ago
I'm not convinced by this argument -- my understanding is that when you sell property that you have claimed depreciation on, you have to factor in that depreciation to your cost basis. So if I depreciated 50k on a small commercial property I bought for 100k over 20 years and then sold it for 200k, I would be paying taxes on 150k of income. Granted, you could continue to defer these taxes and build wealth with 1031 exchanges, but I'm not sure how depreciation factors into that scenario.
- scarface74 8y ago
  Yes that's true, but while you're both getting tax benefits before you sell it and you're making money on the appreciating. So you get to "depreciate" an appreciating asset. Even after taxes, it's a win. Besides, the tenants are actually paying down the debt. Your only investment is whatever relatively small down payment you've made. Hopefully tenant rents are enough to pay for upkeep. You don't pay cash for the real estate - you take advantage of leverage and at the most pay 20% out of pocket. While you own the building, the income you make isn't taxed because you can claim depreciation against your income. If you take into account the time value of money, if you take the tax free money and invest that in another long term asset and sell it, then you pay the much lower capital gains tax.
- eldavido 8y ago

eldavido 8y ago

I generally agree with the article's main thrusts (city living is more "efficient", better/more sustainable infrastructure), but this is a very one-sided view. Sure, cities are more "efficient". They're also more dysfunctional. What you gain in infrastructure use intensity, you give right back to machine politics, failing school systems, outright embezzlement/theft of funds, huge pension problems, entrenched big-city unions, and bad policing. Just watch The Wire if you want to see what it's like. I live in Oakland, CA, which has had, I think 3 or 4 police chiefs, in the past 3 years. Perhaps there's some kind of middle ground. A place that's not some spread-out suburbia where "going into town" is a thing, but not quite SF/NYC-level government problems where building a subway comes at a price of 3.5 BILLION DOLLARS PER MILE. [1] Maybe a city of 1 million is about the right size. [1] https://www.nytimes.com/2017/12/28/nyregion/new-york-subway-construction-costs.html https://www.nytimes.com/2017/12/28/nyregion/new-york-subway-...

tacon 8y ago

Retail is under terrible pressure, and one reason among many is in your pocket[0]: "Consumer income has not changed much since 2006, thus over the last 10 years $190 billion in consumer spending was diverted toward mobile phones. [...] Between phones and their services, this is $340 billion that will not be spent on T-shirts and shoes." [0] http://contrarianedge.com/2017/07/26/not-just-amazons-fault-changing-consumer-habits-killing-old-retail-biz/ http://contrarianedge.com/2017/07/26/not-just-amazons-fault-...

MoBattah 8y ago
I think economic commentators often miss this point. Its also why I think any coming recession will leave the tech industry relatively unharmed.

hisforehead 8y ago

Stop buying things. As for rural areas, why not try something new? Delivery by drone, goods exchanges, unstaffed warehouses access through a smartphone, 3d printers, fast book printers. It's time for radically new ideas to save the rural divide.

brownbat 8y ago

I found this 1982 documentary about malls fascinating, describing them as the future of shopping: https://www.youtube.com/watch?v=G2BlyvN6EeI https://www.youtube.com/watch?v=G2BlyvN6EeI On the one hand, the confident forecasting seems silly in hindsight. You had malls for a hot moment and you decided they would last forever? On the other hand, that hindsight is humbling. Things change. What do we know even now? Society changes. Maybe malls will make a stunning comeback in a few decades. I can't imagine how. Vastly cheaper land or package shipping becoming somehow unsustainable, or just the industry cleans house and survives through attrition. Or maybe online retail will be forever. Or maybe it will be displaced by something unthinkable in thirty years. For all I know some AI concierge service will be a strict dictator over all my finances and purchases, and I'll never touch money, I'll just receive a box of things the machine thinks I need each week. Who knows. We had a thirty year trend that some people thought was forever. It ended, now we all feel smug, think we learned some deeper truth about society. StrongTowns is convinced we should (albeit modestly) reinvest in downtowns. I don't know, that's a lot of conviction for me. Sure, maybe? Am I the only one who feels like I know less now than when this all started?

heurist 8y ago
Responding to your first question: Owners are trying to turn unsuccessful malls into medical centers, places of worship, offices, schools, etc.
jonhendry18 8y ago
"Maybe malls will make a stunning comeback in a few decades. I can't imagine how" They still make some sense in places not blessed with San Diego weather. The problem is, people don't have disposable income to spend at them. (Another problem might be the lack of book, magazine, toy, and music stores. The stores that are left probably have a clientele that is mostly women, and males don't have much reason to visit the mall and spend money.)

burfog 8y ago

What's in a name? That which we call a mall By any other word would sell as well The "downtown" is essentially a mall, but exposed to the elements. No normal mall manager has ever thought "What I really need here is snow, mosquitoes, panhandlers, diesel smoke, traffic jams, or 90-degree weather with 90% humidity." A mall is like downtown, but without those problems. Malls are dying for reasons that are also hurting downtown areas. Online shopping has been mentioned. Another issue is that malls have lost their value as a social meeting place. People used to go to the mall to meet each other. Teens especially did this, causing them to buy things and to bring in parents with the serious money. Now people spend time at home poking at their cell phones; this is how people connect.

adamw2k 8y ago

Really thinking Jetsons here, but won't we simply be able to print most items either at home or at the neighborhood print shop at some point in the next 100 years? I recall efforts in the food, metal, and body part space. Shipping and warehouses become irrelevant, you just buy recipes that can be created in a very short time. Or maybe I'm living on Cloud 9?

jonhendry18 8y ago

Two things I didn't see mentioned: stagnant wages and rising healthcare costs. I don't think it's a coincidence that malls, especially non-upscale malls, are dying at the same time there's a proliferation of dollar stores and thrift store chains like Savers (basically a for-profit Goodwill). Near a mall where I live there once was a Circuit City. Now there's a dollar store and a Savers. Malls are failing because we simply don't have as much disposable income as we had in the 80s and 90s. The malls that seem to be doing well are the upscale malls whose clientele still have plenty of disposable income.