Creating Neighborhood Capital from Strip Malls
Strip malls as community economic generators? New model explores leveraging community strip malls into engines of economic activity versus cash cows for their owners.
From Planetzien | Creating Neighborhood Capital from Strip Malls
Strip malls are in virtually every American city, but they’re rarely an important part of those cities. Ava Bromberg says they can be. Her idea is to turn strip malls into community-owned hubs that generate capital within their neighborhood and keep it there.
Strip malls probably don’t fit into the definition of progressive urbanism for most people, but maybe they should. Well, perhaps after a little organizational tweaking.
The small retail centers are ubiquitous in American cities, with their generic shops selling doughnuts or beer, offering dry cleaning or key-cutting. They’re a part of many neighborhoods, but not necessarily an essential part. They bring goods and services to the area, but are ultimately of the greatest benefit to their owners – off somewhere cashing monthly rent checks from the moms and pops running the little businesses within. That model can change, according to Ava Bromberg. She’s a PhD student in UCLA’s School of Public Affairs and she is developing a new vision for small retail centers that would transform them into engines of social and economic capital at the neighborhood level.
“It’s part mall, part business incubator, part cultural hub,” says Bromberg. The idea is to overlay a distributed ownership model on the typical strip mall that enables the value created by this commercial real estate to cycle back and benefit the neighborhood it serves. Consumers are also business owners, property shareholders, and decision-makers. In this model, the building goes from being a cash cow for one owner to being a bank for the community, into which investments can be made and from which public benefits can be funded.
But it’s also about activating disused retail space for more than retail. Bromberg wants the spaces to partner with local institutions like hospitals and universities to create learning environments and job training opportunities on-site. The idea is to retool the existing neighborhood infrastructure to serve unmet needs within the community.
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I'm not sure I get the implementation. I like the idea and I understand the flow of funds and the advantages it would provide; but how do you get the strip malls in the hands of the consumers? I'm currently advising a community hat has a strip mall on the main corner (it is occupied by cell phone stores, cash advance shops, etc.). It is very profitable for the owner. How would you suggest going about getting into the hands of say a community redevelopment corporation, other than overpaying for it?
I love the thought, and would be very interested in learning more about how to carry it out.
Stephen, as with any real estate transaction – a buyer is a buyer; it doesn't matter if your community group purchases or if you buy it. What usually differs is the way it's financed and the way the ownership is held. I'm assuming the redev corporation is a non-profit. If they are properly documented, they likely qualify for state and federal funds. I would investigate New Market Tax Credits and Community Development Block Grants. As far as overpaying, the chances that can occur are lessened if you have a broker that understands property valuations. You can also produce your own cashflow model and business plan to see if it accomplishes your group's goals.
Stephen, as with any real estate transaction – a buyer is a buyer; it doesn't matter if your community group purchases or if you buy it. What usually differs is the way it's financed and the way the ownership is held. I'm assuming the redev corporation is a non-profit. If they are properly documented, they likely qualify for state and federal funds. I would investigate New Market Tax Credits and Community Development Block Grants. As far as overpaying, the chances that can occur are lessened if you have a broker that understands property valuations. You can also produce your own cashflow model and business plan to see if it accomplishes your group's goals.