To Save Retail, We Need Better Urban Planning

REUTERS/Andrew Kelly

Joanne Butler Contributor
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Trump, Russians, and North Korea:  no matter what, Americans keep shopping.  According to MarketWatch.com, sales figures for April 2017 were 4.5 percent higher than a year ago. However, online retailers have gobbled up much of this growth; their sales were 10.7 percent higher in the first quarter of 2017, when compared to Q1 2016.  The trickle-down effects are coming to your neighborhood.

For example, in the Philadelphia suburb of Media, Pennsylvania, there once was an enclosed mall called Granite Run.  Now it consists of two anchor stores that stand out like lone teeth amid a mouthful of rubble.

The old mall is being replaced with an integrated mix of residential and retail properties.  If you live inside the Beltway and know about Pentagon City in Arlington, Virginia, you’ll have a good idea of what the new Granite Run will be.

The ‘integrated mix’ concept puts condos atop shops and restaurants, and promotes a walkable environment with underground parking.

The old Granite Run mall was similar to thousands of others: a large, enclosed building, with anchor stores and surrounded by acres of blacktop.

As online sales grew (and continue to grow), the mall’s smaller stores closed.

However, the mall’s owner was paying property tax on every square foot, including the empty blacktop land.  With fewer renters to pay their share of taxes, it was time for Granite Run’s re-do.

Adding residential units, rightsizing the number of retail units, and limiting the amount of blacktop will generate additional property tax revenues for the county.

Whether this reconfiguration will allow the anchor stores to survive is unclear.  Last Thursday, the stock price for Macy’s fell to a near-six year low, stock prices for other retailers also fell. Amazon, of course is the big winner.

The key number for Amazon is 20 percent market share in a sector.  Amazon is nearly at that number in the clothing sector, and is now the second-largest clothing retailer after Wal-Mart. Twenty percent seems to be a critical-mass figure – once Amazon reaches that milestone, a legacy retailer is about to topple.  Remember Borders Books?

Besides the obvious change in shopping patterns, Amazon’s success and department stores’ losses have an impact on local tax revenues.  [Amazon collects sales taxes in 45 states.]  As retail stores close – and remain closed in a low-foot-traffic mall – local property tax revenues decline.  Because local property taxes are primarily used for schools, assuming a county’s school population is stable or growing, the loss in revenues has to be made up by somebody.  That somebody is usually a residential homeowner or renter.  Yes, renters get hit too – as their property owner passes any tax increase to the renter.

Good land-use planning and plain common sense indicates the best use of property in a populated area is to make it available for more people to live in.  The current mixed-use trend, with its emphasis on walkability is a good sign.  The era of acres of blacktop attached to an aging strip mall or a dying enclosed mall may be coming to an end.

Perhaps I’m an incurable optimist in a dismal profession, but if this trend helps spread the property tax burden so we residential rate payers can pay less, I’m all for it.