Fox Valley Mall “near Naperville” Part 2 – development requirements

A store at Fox Valley Mall prefers to say they are “near Naperville” rather than the actual location in Aurora. How did this shopping center end up across the street from Naperville?

The Urban Investment and Development Corporation (UIDC) started purchasing property for a shopping center in 1966. At this point, Naperville was expanding to the south and southwest at a rapid rate but was nowhere near the size it is today. Similarly, Aurora had an established downtown but there was not a whole lot of development in this area. To help guide its growth, Naperville had developed regulations, particularly in residential subdivisions, to help ensure quality development.

In 1972, UIDC annexed the land they had purchased to Naperville. According to local officials in both communities, the developer chose Aurora in part because of fewer development regulations. Fallout from this choice ensued. Aurora and Naperville signed a boundary agreement to help limit such situations where a developer could play the two communities off of each other. The 1975 Naperville mayoral race included discussion of the loss of the mall. Additionally, the construction of the mall and the loss of status and sales tax money to Aurora helped spur Naperville leaders toward improving the community’s downtown. After the mall opened, Naperville was able to capture some status and money through the opening of stores on the east side of Route 59.

In sum, the developer of the Fox Valley Mall chose to locate in Aurora for some advantages in the early 1970s. Given the path of the two communities since then, I wonder if that developer would choose differently today. On one hand, a Naperville address would convey a certain status. On the other hand, locating just across the street might be the perfect solution: the developers could get benefits from Aurora while always claiming to be “near Naperville.”

Fox Valley Mall “near Naperville” Part 1 – status

I recently heard a radio ad for a store located at Fox Valley Mall which was said to be “near Naperville.” The mall is officially located in Aurora so why would a store there claim to be in the next suburb over? One word: status.

In this particular location, Aurora and Naperville are separated by Illinois Route 59. On the east side, containing a number of stores just across the street from the mall, is Naperville. On the west side, including the mall plus additional stores, is Aurora. Aurora is the bigger community – roughly 200,000 people – but Naperville is the wealthier, higher status community. Some of the figures: Naperville has a median household income of over $110,000 and 4.9% of residents are in poverty. In contrast, Aurora has a median household income of almost $64,000 and 14.0% of residents are in poverty. The communities also differ in race and ethnicity: Aurora is significantly less white (over 30%) and more Latino (35% more) and Black (5% more).

So, when a store says they are “near Naperville,” what are they trying to hint at? They want to associate their store and the shopping experience with a wealthier community rather than Aurora. They want people to think of an upscale and safe place, rather than the diversity of incomes and races/ethnicities of Aurora. Ultimately, they want shoppers to come and spend money like they have Naperville resources.

If it is the case that the store wants to associate with Naperville, why is it located in Aurora? The bigger question: why is the mall in Aurora? To be answered tomorrow.

The possible problems when governments buy dying or dead shopping malls

According to the Wall Street Journal, some local governments are purchasing shopping malls. With plenty of malls in trouble across the United States, this could be an opportunity for many municipalities. Yet, some problems could lie ahead:

  1. Some of this depends on the resources of the municipality. How many resources do they have to purchase the land and develop it? Does it require taking on debt? Would this debt outweigh the negative consequences of leaving the property vacant or leaving it in private hands? Communities with more resources to draw on have a leg-up in this process.
  2. Finding an acceptable use of the land can be a tricky process since the surrounding properties likely were developed under the assumption that the land would be a shopping center for a long time. Working out the zoning issues, particularly if residences are nearby, could prove tricky.
  3. Developing a plan for these sites is not necessarily easy and part of the reasons the malls are dying or dead is because of the attractiveness of the surrounding area to developers. Swapping out a mall for another thriving commercial use – such as entertainment – may be hard to do.
  4. Could this put communities on the hook for properties that are very hard to develop? It could be useful for local leaders to push the blame on developers or outsiders but it may not be so pleasant if the government is viewed as the reason the property is not improved. Such large properties could become albatrosses for local governments.
  5. Perhaps the simplest route for local governments would be to use the buildings or land for government purposes: park districts, schools, and other taxing bodies that do not always have easy access to large parcels. There might still be zoning issues to deal with and the loss of revenue could be tough. However, repurposing the retail space into space that the broader community could utilize could be a winner.

On the whole, there is a lot of potential for innovation when it comes to local governments and shopping malls. Yet, there are numerous ways this could go poorly for local governments, particularly those with limited resources.

The declining value of shopping mall real estate

The declining shopping mall has led to a drop in value for these properties:

“It’s a tough environment. I don’t think anybody really anticipated the decline of the department store to happen as quickly as it did,” said Joe Coradino, chief executive officer of Pennsylvania Real Estate Investment Trust, which owns 21 malls in the Mid-Atlantic region. “The sellers are clearly on their knees.”

The Philadelphia-based REIT has sold 17 bottom-tier malls since 2013. The last deal, completed in September, was a $33.2 million transaction for the Logan Valley Mall in Altoona, Pennsylvania, anchored by Macy’s, JCPenney and Sears stores. If those same properties were on the market today, prices would be substantially lower, Coradino said…

Not long ago, some of the biggest names in private equity, such as KKR & Co. and Barry Sternlicht’s Starwood Capital Group, were laying out substantial sums to snap up retail properties. In 2012 and 2013, Starwood purchased a combined $2.6 billion of malls from Westfield, followed less than a year later by a $1.4 billion deal to buy seven malls from Taubman Centers Inc. From 2012 to 2014, KKR bought four regional malls for about $502 million, Real Capital data show. That demand has all but evaporated as timing a wager on American malls becomes increasingly treacherous…

It’s easy to understand their reluctance to sell now. Prices for malls fell 14 percent in the past 12 months, even as values for other types of commercial properties, such as warehouses and office buildings, rose or held steady, according to Green Street Advisors LLC. At least four properties have been pulled from the market in recent months because the bids were too low, Dobrowski said.

Even with efforts to save some shopping malls, from adding restaurants and entertainment options, housing, and community spaces, a good number will simply not survive. They will not be desirable enough for retail activity nor prime spots for redevelopment. They may sit empty for much longer than communities desire or can bear. I suspect we will see a lot of potential creative solutions to these dead shopping malls as land owners, developers, and communities try to turn them into sites that again contribute to the surrounding area.

Perhaps the most interesting question here is how low prices will get before they interest someone who will buy them. Are we headed for the equivalent of $1 homes for shopping malls? Perhaps they will become subject to blight and renewal programs? Will the price be low enough for neighbors or communities to buy them simply to raze them? Perhaps they will be the dystopian spaces featured in films like Gone Girl?

Jane Jacobs, self-driving cars, and smartphone walking lanes

Fining distracted pedestrians who are paying attention to their smartphones is one option for communities. Here is another: a Chinese shopping center in Xi’an has a clearly marked lane for smartphone-using walkers.

Colorfully painted paths outside the Bairui Plaza shopping mall have been designated for walkers who cannot be bothered to look up from their devices…

Instead, messages painted along the lane cajole walkers to look up and pay attention.

“Please don’t look down for the rest of your life,” one message reads. “Path for the special use of the heads-down tribe,” another says…

Xi’an is not the first city to experiment with special areas for mobile phone use. In 2014, a street in the southwestern city of Chongqing was divided into two sections. On one side, phone use was prohibited, and on the other walkers were allowed to use their phones “at your own risk.”

The German city of Augsburg in 2016 embedded traffic lights on the surface of the street to prevent texting pedestrians from walking into traffic.

This will be a difficult issue to tackle for many communities. Here are two more additional ideas that may (or may not) help address these concerns:

  1. In reading multiple stories about distracted pedestrians on sidewalks, I am reminded of Jane Jacobs’ thoughts on lively sidewalk life. She argued that a lively street scene full of mixed uses will promote a thriving social scene. Could it be that sidewalks need to be more lively to keep the attention of pedestrians? If someone is walking down a bland block or through a shopping mall that does not really look any different than other shopping malls, it can be easier to pull out a smartphone. Of course, users might be so familiar with the walking area or their thoughts are elsewhere such that no level of liveliness would keep them from their smartphone.
  2. Perhaps some of the technology already being rolled out in cars and destined for significant use in driverless cars that helps cars sense other objects and respond accordingly could be implemented in cell phones. Imagine using your smartphone while walking and all of the sudden a radar screen pops up that indicates you are about to run into something. Or, perhaps it could have lights on different edges that could provide indications that objects are on that side. This is where Google Glass could be very useful: a display of nearby objects could always be within a user’s vision. Maybe technology will soon advance to a point where we have “bubbles” around us displaying information and nearby pedestrians or other objects could trigger some sort of alarm.

Separate walking lanes as well as punishments may not be enough. Given our reliance on technology to solve problems, I would not be surprised if new technology ends up as a substantial part of the solution proposed for problems posed by earlier technology. At the same time, this may be less about technology and more about the changing nature of public life.

As shopping malls suffer, suburbs experience consequences

The slow death of many shopping malls is well documented and it does not just affect retailers and developers; it has consequences for suburbs.

When anchor stores close, it can be hard to find businesses to replace them, because they occupy the multistory buildings at mall entrances that are often at least 100,000 square feet. If no replacement tenant is found, the loss could trigger a decadeslong downward spiral for the shopping mall and surrounding communities.

“The communities wither away, and they never come back,” said Howard Davidowitz, chairman of Davidowitz & Associates, a national retail consulting and investment banking firm headquartered in New York City…

The process of a shopping mall shutting down is slow, often over the course of a decade or more. As stores are boarded up one by one, shopper traffic slows and crime in the area tends to spike, Davidowitz says.

“Malls are big, big contributors to city and state taxes, jobs, and everything,” Davidowitz said. “Once they close, they are a blight on the community for a very long time.”

There are a number of options for suburbs to consider when renovating or replacing malls: try to fill vacant retail space, creating more experiences such as interesting architecture, introducing more mixed uses, and just demolishing the mall and starting over.

But, all of these require time for change to occur, foresight and flexibility on the part of local officials and residents to think about what might be more appropriate in these spaces (as well as how they might diversify their local economy and tax base to offset the loss of tax dollars from a dying mall), and interest in developers and business interests in doing something new. Indeed, a suburb could work really hard to develop new ideas but without an infusion of capital, it may not happen. Or, it may take years for plans to come together and the requisite partners to feel comfortable and meanwhile vacant spaces are just sitting there.

More broadly, the lack of shopping malls hints at a changing way of life in suburbs. Whereas the new postwar suburbs were marked by driving, new shopping malls, and prosperity that allowed people the time and resources to make purchases, suburbs today might be known more for struggling to find retailers, driving to different kinds of places (and less celebration of driving in general), and pockets of prosperity in some places (where malls might still thrive) and then pockets of scarcity elsewhere (where retailers are in short supply or only certain kinds of retailers are available).

Avoiding the shame of Ogden Avenue in southwest Naperville

Thinking more about the decision in Naperville to turn down a car repair shop for a vacant property, I was reminded of how Naperville would prefer its retail areas to look: not like how Ogden Avenue has looked:

The idea is to update the look and feel of intersections and parkways along East Ogden Avenue so drivers know they’re in Naperville, shoppers find the area more inviting and businesses see it as primed for development, said Christine Jeffries, president of the Naperville Development Partnership…

And my own comments on this:

But, I would suggest there is a deeper issue: can these kinds of improvements truly lead to more development and a stronger sense of community? East Ogden Avenue is like many sizable suburban streets: it is fronted by numerous businesses (ranging from restaurants to auto care facilities to big box stores to home converted to offices), there are signs and buildings everywhere, and has numerous cut-outs to the road. To many, this look is not very attractive. These are the sorts of streetscapes that wealthier suburbs today try to avoid even if they were common several decades ago.

Does putting signs at intersections, putting in new landscaping, burying power lines, and rebranding the stretch “Uptown Naperville” really change what is there? It may look nicer. It may tell people more clearly that they are in Naperville (God forbid that they are in Lisle). But, is this the true answer to a kind of development that is outdated and disliked? I am skeptical. Just contrast this stretch to downtown Naperville where a certain level of density and vibrancy leads to an exciting scene. The stretch on Ogden is too long, too broken up, devoid of attractive residential units (though they are often just behind the businesses), and difficult to connect.

In other words, higher-status suburbs want to avoid stretches along major roads that are marked by fast-food restaurants, car dealers and car repair places, strip malls, signs for retailers and businesses, and endless curb cuts. These may be quintessential American stretches – everything is accessible by car, it separates these uses from residential areas, it crassly shows off consumerism – but they are not considered aesthetically pleasing nor do the businesses that locate there tend to cater to a wealthier clientele.

The step up from this jumble of businesses would be the locations of retailers and businesses around shopping malls and “lifestyle centers.” These nodes are increasingly organized around entertainment and eating. They offer opportunities to have a single unifying aesthetic as well as walkability within the development. This is what Naperville has aimed for in Naperville Crossings with a large movie theater, numerous restaurants, and smaller retailers. It is supposed to look more like a small town and be less threatening to nearby upscale housing.

One final thought about Naperville Crossings: even within a wealthy suburb like Naperville, there is vacant space in an upscale development that has been open for quite a while. It is hard to know whether this reflects on Naperville and the surrounding area or is indicative of broader headwinds facing businesses and retailers.