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welcome to the Deerwood Realty YouTube channel I'm John Schink founder and managing broker of Deerwood Realty in St Louis Missouri now look sometimes we have to question why is an article written what's the purpose is it to inform is it propaganda what what is it why why is this article being shown to us today um and I've got this article today and I I don't exactly know what the point of it is is it to Hoodwink people who don't know anything about

development I don't know I know it's very fascinating uh we're going to talk about something that's uh you know it's odd to me here's I'm going to put the premise up front it's basically talking about development okay now what it is you develop it and and how you develop is is you know up to you so let's get to it and then we'll just kind of go over what you think and what I think and and see where that leads us it says turning a tiny fraction of America's dead strip malls into housing could create 700,000 new apartments all right

and you see see the problem here like building 700,000 new apartments would get you 700,000 new apartments like if you just built them right right the challenge is is how are we going to build them and what land are we going to use and then it gets into this well I guess we could use old strip malls you could I guess but you I mean it doesn't have to be so let's let's let's read into this okay it says you've likely heard the US is in the midst of a retail apocalypse the rise of e-commerce has pushed big box stores into bankruptcy and helped create zombie malls across the country it doesn't look like the trend will reverse itself anytime soon well why would that be though like why are we in the midst of a retail apocalypse the rise of e-commerce or like physical shopping centers kind of got run down and people kind of didn't want to go anymore like the malls of the 50s are over maybe that's what it is maybe it's I mean I'm sure e-commerce has a lot to do with it but if when's the last time you've been to a mall it's like a dying time piece it's it's depressing like you when you want to buy something you want to be happy you bought it not depressed it says at the same time communities across the country are facing housing affordability crises driven by the shortage of homes well if you believe that and as we've talked I don't think that's the case there's not a shortage of homes there's plenty of investors that swoop up and buy homes every single day okay there's a shortage of available housing for people that can afford it because they're being pushed out by all kinds of people the air andb Airbnb crowd um so I don't I don't I just I reject this I reject this on its face urban planners and developers across the country are pushing a fix for both converting strip malls into housing and so just so you understand I I have no problem with development I think it's fantastic but if you got a big piece of land like let's look in St Louis uh there's there's a there's a series on the Jamestown Mall and and what a failure that ended up being okay they still haven't gotten it torn down yet and it's been years all right that's a big piece of property if if housing is so bad why hasn't that been developed here in St Louis okay why hasn't it been developed it hasn't been developed because there's been no Financial incentive to do

so maybe some crony cronyism but but who knows it says if just 10% of vacant strip malls best suited for redevelopment were turned into housing it could create more than 700,000 homes a new report from housing nonprofit Enterprise Community Partners found okay so now we into the nonprofits which I'm if if you haven't by now you should probably be skeptical of nonprofits and any governmental organization like that's just the way it should be at this point skeptical but think about it if just 10% of vacant strip malls best suited for redevelopment were turned into housing okay so what about the other 90% that aren't best suited for redevelopment what about those like that's that's my issue with this article in general it's like look if you find a piece of property in an area of high demand build housing okay if that's if that's the highest and best use you don't need to sell me on an idea of strip malls burn burn every strip mall down I don't care okay but it's not it's it's clearly not a Panacea because it hasn't been done and we'll get into it says the estimates uh that estimate assumes half the new housing would be lower density multif family housing half would be medium density multif family buildings of up to six stories okay so now what you're doing it's not really converting you're not really converting this space you're tearing down the buildings and building new buildings on the on the on the footprint of that old development now that's that's been development for in in the United States for like a 100 years that's not new there's nothing new about that it says opportunities for Brick and Mortar retail conversions are everywhere in both cities and suburbs so then all of a sudden now we're doing conversions which is different than tearing things down and building them again okay and now you say John well what if you take like South County mall here in St Louis and you you tore down half of it but you left the other half for retail wouldn't that be great well is retail going to be supported I mean it's a real it's a real issue now in theory who doesn't want to live right next to a grocery store right it'd be so great to just not have to really have a big refrigerator you just literally get out of your house and you go walk to the grocery store pick up your groceries for the day and walk home right that seems like a great idea I I would like that right but then the way we do it here in the United States is like we build these huge developments with thousands of people and it's like well at least that's what they're trying to do and and it doesn't it it it doesn't make retail more interesting and it doesn't make like single family homes more interesting it just makes it it's like it's like the it's like only in America would you do such a thing it says um most jurisdictions have at least a couple of dated strip mall properties that are underutilized and could be redeveloped into housing and affordable housing oh wait a minute or mixed use developments that have both affordable Housing and Community serving spaces okay so now we're not building now we're not worried about housing as much as we're worried about H uh affordable housing or mixed use developments that have both affordable Housing and Community serving spaces right now now we're not just developing for profit which is why these these why these uh developments aren't aren't taking off there's no profit motive at least not just based on going to a bank getting a loan and doing it that way it's more it's more Sinister it says turning commercial buildings into homes is nothing new that's absolutely right cities across the country have transformed transformed under underuse or vacant offices and Manufacturing space in new apartment and condos they've also turned them into um retail centers look at uh The Foundry down in St Louis many are increasingly looking to repurpose offices as workers settle into hybrid or fully remote schedules in the wake of the pandemic which even three years later YouTube will now demonetize or not demonetize but they'll they'll shadowban this video because I said the word pandemic even if it's in the context of real estate which is absolutely infuriating but you know you can help me out by the way by watching the video to the end and subscribing that would help because I I'm getting I'm getting shadowbanned for just the silliest of things um the White House also recently weighed in and announced new funding and technical assistance for office to residential conversions particularly near mass transit stations and we talked about this that's it's it's a boond doggle absolute boondoggle building conversions are notoriously expensive and sometimes practically infeasible without land use policy updates tax incentives and other regulatory changes many just aren't possible and that's just it honest honestly look if there's a profit motive someone will do it okay if there's no profit motive no one will do it and what ends up happening on a lot of these things is when there's no profit motive people that do come in to do it extract a huge amount of credits and cash from government organizations uh to do it and then it doesn't even end up getting built just people pocket the money and you say that's not true I'm telling you if there was a profit motive if there really was a profit motive people would be doing it already says but when it comes to strip mall conversions finding the right property to redevelop is the bigger challenge strip malls are often zoned exclusively for commercial usage so conversion projects might require zoning changes local community support in the support of any existing tenants well yeah and and and we're we're kind of not talking about something seriously problematic and that is commercial real EST estate generates far more tax revenue when it's when it's working than residential real estate and what communities do you know of want to get rid of their commercial uh tax benefits for residential like and reone things and I'll give you an example in St Louis there's the there was what was called the Crestwood Mall okay Crestwood Mall sat vacant for 15 years all the all the infr structure in the mall was was underneath the mall right so all your sewers all everything was all underneath the mall the only way to redevelop was to tear the entire thing down and start over Okay and it took forever for them to do so and even now it's built out it's still not 100% occupied um and it's just it's just um it was just heartbreaking to the city because they wanted that they wanted that tax revenue there's nothing I look I don't have any problem with people wanting tax revenue okay I mean I get it I understand but when you're taking this this is a very sick situation where you're taking what was commercially zoned space and turning it into residential because you you are not supporting any sort of commercial uh infrastructure in your community I mean that is problematic I mean that's just from my my point of view says and financing a conversion project often isn't straightforward developers generally need to Cobble together funding from various government programs including the lowincome housing tax credit and Community Development block rants you see this this is the issue if it were profitable they would do it it is not profitable so they do not do it unless they get some sort of assistance from the government and even then the assistance from the government is not the same as building something for profit it's not the same I have no problem with people redeveloping things but this isn't even a conversion like they're talking about it as a conversion but then they automatically in the article talk about how it would be um building more you know uh lower density multif family housing and medium density multif family buildings of up to six stories I I mean who is excited like are you excited about multi family housing is the American dream to go and buy uh go live in multi family housing is that what the American dream has become hey great we can all live in

apartments like wasn't the whole point of single family homes here's something that you could own that's yours that the government can't take away from you as long as you pay your

taxes I'm just saying it's it's it's sad it's sad in a way this article talks about hey you could develop this stuff the reason why we don't is there's no money in it well that's that's right I mean here's something I'm going to tell you guys that I that I'm ashamed to say and I'm ashamed to give you any sort of insight but do you realize nobody's going to church anymore I mean relatively there's thousands and thousands of churches that are just going out of business okay you could develop those day after day after day after day okay now I don't and you say why don't you John is it not a profit motive I don't have any money I don't have any money to develop anything done I have to do everything on my own but I'm telling you you know there's always a profit motive somewhere there's always a way to make money there's an angle converting strip malls I mean it would be fine if there was a profit in it but if you have to use affordable housing credits if you have to make it a multifam six-story building it isn't what it isn't what most people want right now maybe that changes in the future okay maybe people want to live in multif family buildings of six stories or more um in the middle of the suburbs but right now it doesn't seem to be where we're at what do you think I bet you guys have opinions and it's look I'm totally good with you guys disagreeing with me 100% I'm not against the development I just I just want you to understand I'm not I'm not against any of it what I'm saying is is this article is like the whole premise is hey we could develop this if only it was affordable and made sense and we got grants from the

government that's kind of where I'm at um that's all I have for today thank you for watching thank you for listening and I'll catch you on the next one