The Ritter & Randolph, LLC Blog

Shopping Malls Around U.S. Face Further Vacancies

Aryeh M. Younger, Esq.

A recent study published by Reis Inc., a real estate data firm, confirms an ongoing trend in U.S. commercial real estate. Shopping malls are continuing to lose tenants, as American consumers increasingly turn online to purchase items traditionally sold in brick-and-mortar stores.

According to an article in the Wall Street Journal, the Reis Inc. study claims that shopping mall vacancies are at a six-year high. The study is based on an analysis of 77 metropolitan areas in the U.S.

The flight of brick-and-mortar tenants has a number of experts and politicians pointing the finger at online retailer Amazon.com. Just recently, President Donald Trump accused the online giant of paying too little in taxes while “putting many thousands of retailers out of business!” However, the president is not alone in raising alarm over Amazon’s impact on brick-and-mortar stores. Lawmakers in states across the country are beginning to explore possible ways for Amazon to pay more taxes, hoping that such maneuvers will increase the competitiveness of non-online stores.

In addition to the Reis Inc. study, other news has demonstrated a growing problem for shopping malls. Brookfield Property Partners LP, a company that owns and operates thousands of shopping malls around the world, announced that it has reached a deal to acquire GGP Inc. at only $23.50 a share. GGP, Inc. is a publicly traded company with shopping malls around the country. Market experts were surprised to learn how little Brookfield negotiated to acquire the company, a further indication of the fact that brick-and-mortar retailers face a serious crisis. GGP Inc. is also the owner of Cincinnati’s Kenwood Towne Centre.

The fate of U.S. shopping malls, both big and small, may rest with lawmakers who already seem eager to curtail Amazon’s growth. If they successfully slow the rise in online shopping, perhaps shopping malls around the country will be due for a comeback.

Demand For Homes To Rise This Spring

Aryeh M. Younger, Esq.

A recent article in the New York Times highlights several factors that will help determine the fate of this spring’s housing market in the U.S. The report concludes that housing prices around the country are likely to increase, with the supply of homes lagging the ever-increasing demand stemming from new millennial homebuyers.

Among the factors impacting this spring’s housing market is the recent federal tax law, which experts predict will have an overall negative impact on the demand for new housing. The new tax law reduces the amount of mortgage debt that home buyers can deduct from their federal taxes. As a result, buying a new home will cost more for many high-income purchasers in 2018 than it did for those in 2017. The mortgage deduction in 2017 stood at $1 million and has now been reduced to $750,000. Despite this change, Moody’s Analytics predicts that the overall negative impact on the housing market will be marginal.

A second factor likely to have a negative impact on the demand for new homes is rising interest rates. Interest rates for fixed-rate mortgage loans have increased because of higher inflation and a growing economy-both factors are expressed by rising prices in the global bond markets. However, as with the new tax law, the negative effects of higher mortgage rates are not projected to have a severe impact on home buying. In fact, a recent survey by the online brokerage firm, Redfin, indicates that most U.S. homebuyers will not alter their home buying plans as a result of increased rates.

At the end of the day, this spring’s housing market is likely to be most influenced by broader demographic trends in the U.S. Members of the millennial generation are continuing to buy homes at a rate outpacing supply. Basic economic calculations resulting from this phenomenon indicate that home prices will continue to increase due to the disparity between supply and demand. So despite the news emanating from the economy or Washington, the housing market this spring seems poised for lots of selling-and at higher prices.