By: Eli Loebenberg, CPA, CEO, Madison SPECS
Popular media is full of gloom and doom predictions regarding the death of the shopping mall, citing the fact that 400 shopping malls in the US have been repositioned or closed in the past decade, and no new shopping malls have been completed since 2009. However, the shifting landscape of retail markets does not signal the death of the shopping mall. Rather, the traditional shopping mall is experiencing an evolution as investors and developers work to meet the changing needs of the next generation of shoppers.
There are many influences which are changing the shape and direction of the traditional American shopping mall. Competition among regular retailers is stiffer than ever, as online shopping and new delivery channels erode sales for “brick-and-mortar” stores. As a result, many department store anchors have disappeared due to bankruptcies and consolidations. And, consequently, the focus of the shopping mall industry has shifted. The success of today’s shopping mall depends on the quality and character of its public environment, as much if not more than the quality of its shopping. The mall has become a gathering place, a location where people interact comfortably and spend time with others. In essence, its become the social hub for physically connecting and interacting with others.
While new construction has stalled, developers are rehabilitating and repositioning existing mall sites across the country. Renovating an aging mall is a tremendous investment. Thankfully, the IRS does give direction in the classification and examination of improvement costs, in order to recover costs through depreciation of tangible property. Continue reading