Sunday, June 10, 2001

Shopping malls not dead yet

By Glen Creno
The Arizona Republic

        The July 1998 cover of Time magazine promoted an Internet retailing story that wrote the obituary for shopping centers. “Kiss your mall goodbye,” the headline blared.

        After decades of ruling retailing, malls suddenly were being portrayed as stodgy and out of step. Nimble Internet merchants were poised to take over, promising to sell anything shoppers wanted cheaper and more efficiently. Malls could retire gracefully.

        Almost three years later, Rob Ward is still standing. The chief executive of Phoenix mall developer Westcor just spent a year on the speaking circuit as chairman of the International Council of Shopping Centers, where he heard a lot of chatter about Internet shopping.

        But the new buzz wasn't whether Web merchants would put mall developers out of business. Instead, industry players wanted to know whether one of their pet legislative goals — sales tax on all Internet transactions — would finally fly.

Four concerns
               Mr. Ward said he thinks it will, though others disagree. “I think the die is just about cast,” he said. “Everyone's come around.”

        Some issues worrying shopping center developers:

        • Internet sales taxes.

        • Bankruptcy laws.

        • Developer-municipal partnerships.

        • Urban growth controls.

        The Internet tax issue is far from settled. Congress has wrangled about it for years and must decide by October to extend a moratorium barring taxes on Net access. That's likely to fly, but there are still questions about whether a sales-tax accord can be reached.

        Laws in 45 states call for those taxes to be collected, but they're not usually enforced. Internet retailers collect the taxes only if they also have a conventional store in the state where the computer user lives.

        While some conservatives complain that an Internet sales levy is just another burden for taxpayers, many retailers say it should be collected as a matter of fairness.

        “We're still lobbying folks in Congress — saying that wherever you buy your product, if the sales tax is there, you should pay it,” said Patrice Selleck, an ICSC spokeswoman.

Crucial reform
               The industry appears to be on the verge of a win in bankruptcy legislation. Both houses of Congress have passed bankruptcy-reform measures.

        Though much of the focus was on rules for individual bankruptcy, Mr. Ward said the issue also was crucial for shopping centers.

        A spate of recent bankruptcies by companies like Montgomery Ward and discount chain Bradlees littered the landscape with empty buildings. Landlords wanted a quicker way to reclaim vacated space, saying an empty store stigmatizes a center and reduces traffic at nearby businesses.

        “Our industry was after possession,” Mr. Ward said. “When you get into bankruptcy, you have to make decisions quicker. You can't just sit there and keep it dark.”

        ICSC also is beating the drum on partnerships between developers and government.

        “We have to understand better what cities want, and cities need to understand better what it takes to run our business,” Mr. Ward said.

        That will be especially important as interest in quality growth grows. Mr. Ward has seen the issue crop up across the country, especially in areas with threatened wetlands.


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