1) How to Revive Dying Shopping Malls

The narrative around shopping malls for years is that they are dying.

While there has been a resurgence in top tier malls, many lower tier malls are still struggling and may actually face extinction.

Fortunately, there may be a solution to bring these properties back to life.

Firms like Centennial and Pacific Realty Capital Partners are looking to turnaround struggling shopping malls by turning them into “micro-cities” for living, working, and entertaining.

Here’s how development companies plan to turn shopping malls into 24/7 mixed-use communities:

• Acquire well-located suburban malls, situated at well-trafficked streets and intersections

• Demolish parts of the mall that are no longer usable, to allow for mixed-use program

• Add residential component and relocate existing parking

• Re-lease anchor slots to alternative uses, such as healthcare, sports/ fitness, and entertainment

• Re-tenant existing mall

Key Insight→

Many shopping centers have the infrastructure and ideal location to be converted into “micro-cities”. It’s time to rethink the traditional shopping mall. While some shopping centers are still thriving, many are left struggling because there are simply too many of them. The days of going down to Sears and grabbing an Orange Julius are over. The opportunity exists to convert under-performing shopping malls into thriving mixed-use communities.

2) Decarbonizing Real Estate as a Profitable Strategy

It’s now widely known that the real estate industry is a large contributor to carbon emissions, responsible for about 40% of greenhouse gas emissions. (Side note: Proving that karma is real, the environmental impact has led to soaring insurance costs for property owners.)

Can investing in sustainability also be profitable?

Fifth Wall, a leading VC in the real estate space, has been investing in climate and has been championing decarbonization as a strategy for creating a healthier planet AND a path to profitability.

One firm, Galvanize Climate Solutions, has recently created a real estate arm to put their money where their mouth is and show that decarbonization can be a profitable real estate strategy.

This is how they plan to do it:

• Buy well-located, high quality, low-density, multi-family homes, between 1 and 3 stories, with parking

• Add solar panels to parking and make eco-friendly renovations

• Use in-house science and tech experts to calculate emissions and cost of upgrades

• Take advantage of federal financing incentives

• Upgrade to net zero within 3 years

The end result should be a portfolio of properties that cost less to operate, creating value and additional net income for the investors.

Key Insight →

Decarbonization is not just good for the environment; it’s also profitable. Research has shown that energy efficient buildings earn rent and sales premiums. They also cost less to operate. With financial incentives also in place for upgrading building efficiency, all the components are in place for a profitable strategy.

3) The World’s Tallest Tower Resumes Construction (and what this may mean for the economy)

This week, the Jeddah Tower resumed construction, after being stalled for 5 years. Once completed, it will rise to 3,281 feet. That’s taller than the Burj Khalifa, which stands at 2,722 feet, and more than twice as tall as the Empire State Building at 1,454 feet!

The tower is now one third complete, after having stopped construction in 2018. The project is estimated to cost $20B and take 10 years in total to complete.

Here’s a sample of what the completed tower will offer in over 200 floors:

• Four seasons hotel and apartments

• World’s highest observation deck

• Shopping mall

• Class A office

• Luxury condominiums

• Dining

What do these super tall structures say about the economy?

The Skyscraper Index is a popular concept that showed a link between the world’s tallest buildings and recessions. The theory is that when the ambitious skyscrapers are financed, the economy may be overheated and at the end of a business cycle.

Here are some examples of skyscraper construction and the accompanying recessions:

• Philadelphia City Hall completed in 1901, along with a US stock market crash that same year.

• The Chrysler Building and Empire State Building were completed in 1930 and 1931, right after the Wall Street Crash of 1929.

• The World Trade Center and Sears Tower were completed in 1973 and 1974, right in the middle of the 1973 US and World economic crisis.

• The Burj Khalifa was completed in 2010, in the midst of the Great Recession.

Other research has since shown that while there may not be a correlation between business cycles and skyscrapers, GDP growth can be shown to predict changes in building height. We witnessed this growth of skyscraper and GDP growth in the US in the 1900s, and then Asia and the Middle East in the late 1990s and 2000s.

Key Insight →

The Jeddah Tower construction shows the growth and ambition in Saudi Arabia and the Middle East. With the Burj Khalifa in Dubai, Qatar hosting the World Cup, and now the Jeddah Tower and other ambitious mega-projects in the Middle East, these oil-wealthy countries are looking to create world-class destinations.