What could go wrong if a suburb buys up a vacant shopping mall to redevelop it?

The suburb of Bloomingdale, Illinois got fed up with the lack of redevelopment a formerly thriving shopping mall so they are buying up the property:

Photo by Aldiyar Seitkassymov on Pexels.com

Frustrated by years of inaction by the owners of Stratford Square Mall, Bloomingdale has spent more than $5.6 million to buy former department store buildings and open space near the mostly deserted shopping center.

Now the village is trying to use its powers of eminent domain to take over the core of the mall itself. Bloomingdale has filed a condemnation lawsuit aimed at acquiring the property. Village President Franco Coladipietro called it an “act of last resort.”…

Bloomingdale has been buying mall real estate to facilitate a full-scale redevelopment of Stratford Square. The village paid $2.4 million for the vacant Carson’s department store, $2.15 million for the former Burlington building and $1.1 million for a vacant parcel east of the mall, between townhouses to the north and medical offices to the south…

“You have the potential of a brighter future. I understand that there’s risk. We look at it as a calculated risk,” he said. “And we’ve done the due diligence prior to engaging in the purchase of the properties.”…

To that end, the village opened a line of credit, or short-term loan, to pay for the purchase of the Carson’s, Burlington and undeveloped properties. The village also filed condemnation lawsuits targeting Kohl’s and the vacant Sears store to “keep everything on the same track,” Coladipietro said.

If all turns out well, the suburb will be able to say in ten or twenty years that the former shopping mall property is an asset for the community with new, vibrant uses.

But, this could also turn out poorly. The suburb has borrowed money to buy property. They are in court. The developer has not successfully pursued redevelopment; will the village be able to do better? What happens when the bills come due and/or the community cannot agree about what the mall property should become and/or potential developers are still not interested in the property?

The Village President says this is a “calculated risk.” Indeed. Suburbs do not like dealing with significant vacant retail space and this mall is not the only one in the area facing these issues. I hope they have a manageable floor for the mall property if all does not go as planned.

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