Two New Jersey legislators have a bill in the works to offer tax breaks to strip mall owners to “refurbish distressed shopping centers.” With store vacancies up, rents down, and new mall construction proceeding, the idea is to attract renters to existing buildings. But instead of helping to soak up excessive inventory, the bill is another example of government planners trying to outguess market signals.
Interestingly, a corporate marketing executive explains in The Philadelphia Inquirer why fixing up older strip malls won’t necessarily bring in new renters, “What’s in fashion now has been in fashion for 10 to 15 years,” he said. “The look has changed. There’s more parking, and everyone wants that stuccoed surface.” In other words, tax breaks to fix up older buildings won’t necessarily make the space more profitable for business owners. And in fact, older malls with bargain rents might provide an alert entrepreneur with an opportunity to discover another use for the space.