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  • Writer's pictureRealFacts Editorial Team

Brookfield’s Plan to Turn Malls Into Minicities Falls Short

mall interior

In 2018, Brookfield Property Partners made headlines with its audacious acquisition of GGP, a major mall owner. This move was rooted in a vision to transform traditional malls into vibrant minicities, integrating residences, offices, hotels, and retail spaces. While progress has been slower than anticipated, Brookfield’s experience offers valuable lessons for investors interested in large-scale property redevelopment.

The Power of a Long-Term Vision

Brookfield’s strategy was always long-term. Despite the slow pace of transformation, the company has remained committed to its vision. This steadfast approach highlights the importance of patience and persistence in large-scale redevelopment projects. Investors should recognize that substantial projects involving significant structural changes and regulatory hurdles often require extended timeframes.

Navigating Regulatory Challenges

One of the primary obstacles Brookfield has faced is obtaining approvals from municipalities. The protracted approval processes, often due to community pushback and complex zoning laws, illustrate the importance of understanding and anticipating regulatory challenges. Investors can learn from Brookfield’s experience by:

- Engaging Early with Stakeholders: Early and continuous engagement with local authorities and communities can smooth the approval process and mitigate opposition.

- Staying Informed on Local Laws: Understanding local zoning laws and recent legislative changes can help in planning and accelerating project timelines.

Adapting to Market Conditions

Brookfield’s redevelopment efforts were further complicated by the COVID-19 pandemic, rising construction costs, and increasing interest rates. These external factors necessitated revisiting and adjusting plans. Investors should take note of the importance of flexibility and adaptability in their strategies. Market conditions can change rapidly, and having contingency plans or the ability to pivot is crucial for long-term success.

Prioritizing High-Quality Assets

Brookfield has wisely focused its efforts on its top-tier properties, which have shown resilience and strong performance. These properties, such as the Grand Canal Shoppes in Las Vegas and Ala Moana Center in Honolulu, are nearly fully occupied and have tenant sales significantly above pre-pandemic levels. Investors should consider prioritizing high-quality assets that are more likely to withstand market fluctuations and provide stable returns.

Leveraging Mixed-Use Development

Brookfield’s vision of transforming malls into mixed-use developments is a forward-thinking approach to real estate. By integrating residential, office, and entertainment spaces, they diversify income streams and reduce dependence on retail alone. Investors can learn the following:

- Diversification: Creating a mix of residential, commercial, and retail spaces can make properties more resilient to market shifts.

- Future-Proofing: Incorporating various uses can safeguard investments against changes in consumer behavior and economic conditions.

Capitalizing on Legislative Changes

Brookfield’s project at the Stonestown Galleria in San Francisco benefited from new California laws that facilitate residential development. This highlights the importance of staying abreast of legislative changes that can create opportunities or streamline project approvals. Investors should:

- Monitor Legal Trends: Keep an eye on new laws and regulations that may impact property development and investment opportunities.

- Advocate for Favorable Legislation: Engage with policymakers to support legislation that promotes development and investment.

The Importance of Strategic Sales

Brookfield has also strategically sold or handed back to lenders several underperforming malls. This decision to streamline the portfolio to focus on top-performing assets is a critical lesson for investors. It underscores the need to:

- Regularly Assess Portfolio Performance: Continuously evaluate the performance of assets and be willing to divest those that do not meet investment criteria.

- Focus on Core Strengths: Concentrate resources and efforts on properties that align with long-term strategic goals and have the highest potential for returns.

Brookfield Property Partners’ journey in redeveloping malls into multifunctional hubs offers a wealth of insights for investors. The importance of a long-term vision, understanding and navigating regulatory challenges, adapting to market conditions, prioritizing high-quality assets, leveraging mixed-use development, capitalizing on legislative changes, and strategic portfolio management are all critical lessons.


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