The landholders of the Sunrise Mall in Northern California have an observation of modernizing the 45-year-old center. However, the tenants are creating obstructions over getting it done. Intended modifications have been bolstered by the property’s department stores, which includes Macy’s, J.C. Penney and Sears. Shoppers in the area are heading towards contemporary centers as redevelopment stalls.
Department stores might be grappling to attract consumers but they haven’t yet abdicated their hold on America’s mall. The mellowing retail juggernauts are abusing contracts with landlords that provide them ability to dominate how a property can be expanded, obscuring everything from parking to symbols to the kind of employees are allowed into a center.
Known as reciprocal easement agreements, or REAs, the agreements were drafted decades ago when landlords depended on department stores to attract suburban shoppers. The predominance of malls in the US are hampered by an REA tying developer’s hand as they cope up with expeditious shift in retailing according to Ryan Rivera, a partner at law firm Hartman Simons & Wood LLP.
According to DJ Busch, a managing director at real estate research firm Green Street Advisors LLC departmental stores are being impacted by the changing taste of consumers to shop online. They have been declining for 15 years. The dated limitations levied by the REAs is the reason why many malls are struggling to progress. He also said that in many instances what worked 50 years ago is now outdated.