Where there is a will, there is a mall. Such seems to be the standard in cities around the world willing to give up large plots of lands to make room for a shopping mall. Before, shopping centers or malls used to be a sighting. To see one meant to appreciate it and to go to one meant a full days agenda. Malls were a bit more exclusive than available and held a certain prestige. But as days go and the world advances so do practices, and the practices of developing malls has seen a spike. That would certainly be the case in Lebanon where we have gone from a couple of malls, to a handful, to picking one out like picking colors out of a rainbow. With such haste certain aspects go overlooked. Particularly, the effect of these malls on the surrounding environment. Of the top of my head, the volume of cluster a mall brings to an area. Such a strong polarizing figure attracts a lot of attention, traffic, and energy, that it changes the characteristic and the environment of a neighborhood. As for more tangible effects, mall have a certain way of effecting the surrounding, various forms of real estate. Some might have been there years before the mall was, but may not be there soon after. Without further ado, lets get to it shall we.

Residential Property

From just taking a minute to think about it, automatically you can make the assumption that real estate prices for residential property would increase as a mall is being developed. Being the large lovable, immobile attractions and shopping clusters that they are, a mall makes for a vibrant atmosphere to be around on a daily basis. Especially when the holidays come around and their window displays come alive with creative imagery and theatrics, with one display almost trying to outdo the other. That's not all though, all your shopping needs being located ideally in one place make it keen for residing near a mall. A mall development means increased value for the residential real estate surrounding it. If you own an apartment, or a building near where a mall is being built then you would most probably witness an increase in the value of that asset. Simultaneously you would also see an increase in rent, because when value increases so does rent. The equation is as follows.

Yearly Rent

------------------ X 100 = Yield

Property Value

Think of yield as a return on investment. If you’ve purchased a property for $1,000,000 USD, with a rental income of $70,000 USD per year, that's a yield of 7%. IF the property value increases to $2,000,000 USD after the erection of a mall, then in solving for yearly rent you multiply the new value ($2,000,000 USD) with the yield (7%) and you will get the adjusted rent which would be $140,000 USD. Of course a full increase of 100% in value is extremely rare, this increase was used for explanations sake and to make the example easily understandable. Basically, a mall means two things to two different people. If you own property, the mall means you are likely to see an increase in value of your property. If you rent property, chances are the mall will attract other people who are willing to spend more on rent and thus driving your rent up. I told you before; it's a polarizing figure...

Retail Property

Bigger, newer, shiny, fancy. A shopping center represents all these things. It is thus, the embodiment of capitalism at its finest. It is firm fist of big brands coming down hard on the little guy trying to make ends meat. It is what it is. If you own a coffee shop, bad news for you because the mall down the streets has a Starbucks, a Dunkin' Donuts, a Costa and like four or five concept stores. If you own a clothes shop, tough luck the Mall has 34 of them. And that’s exactly what malls do. They are so big, so magnetic that that they offer much more than the regular retail store. If you own a small shop on the main road where you sell flowers from, you rely on customers to seek you out purposefully for certain and specific reasons, an anniversary perhaps. Whereas if you operate the same business from a mall, you may attract the person who is shopping for a gift, walks past your store and thinks flowers would compliment their gift. Slowly but surely these little shops and business owners start to move up the street and into the big mall leaving all these retail stores empty. That's if they can afford the in-mall rents. For those who can't, they can't afford to compete with the stores in the mall and because of the loss of customers, end up closing shop seeking business refuge elsewhere. This in turn, affects the landlord of these stores, because they were once collecting handsome rents for people to do their business there. Unlike the residential property owners, the retail property owners see a decrease in value on their real estate because their empty. They either lower their rents in hopes of finding new tenants, or they remain vacant.

Conclusion

Let's bring it back full circle here. Malls are polarizing. They attract a heap load of attention in terms of consumers and businesses. Malls affect neighborhoods as a whole. Apartment values and rents tend to rise as more demands is being sought for these units because of their proximity to the mall and the assumption is living near malls is desirable. As for retail units their rents tend to decrease as business owners begin to leave the "shop on the corner" and begin to head for the 5x5 retail space "past the escalator". In turn the owners of the retail shops lose out on tenants and witness a decrease in value of their shops. Unless they act fast they will continue to see their shops remain vacant. Now in the long term these shops will be occupied by very specific kinds of businesses, ones that you will not typically find in malls (think mechanics stores or select FnB chains). But in the short term they will be losing money. And that’s not to say malls are bad or have a negative effect. Malls are very strong attraction for tourism and are beneficial for the society as well as many malls throw charitable events and etc. However, there must come a conscientious awareness in the effects mall have, whether it may be tangible and visible (i.e. the fluctuation in prices, vacant stores), or not so clear in nature (i.e. the cluster they produce, the pollution, etc.). The question that needs to be asked is do we really need a mall in certain areas? Wouldn't more public space such as an open-air park been have been more suited for an area such as Verdun? Surely not as profitable as a mall but parks do yield some economic advantages as well. Reckless real estate ends up benefiting no one. Real estate developers owe society, neighborhoods, and people some sort of consciousness in their decision-making. We will all enjoy the ABC mall now, but when they decide to open another one in another area later on, we will realize that malls are meant to be sought out and not trip over them because of their abundance.