Greyfield land

A greyfield in Richmond, California is used to expand a Kaiser Permanente hospital.

Greyfield land is a term used in the United States and Canada to describe economically obsolescent, outdated, failing, moribund and/or underused real estate assets or land. The term was coined in the early 2000s from the 'sea' of empty asphalt that often accompanies these sites. "Greyfield" is a relative neologism as compared to more commonly known terms such as brownfield or greenfield.

The term has historically been applied to formerly-viable retail and commercial shopping sites (such as regional malls and strip centers) that have suffered from lack of reinvestment and have been "outclassed" by larger, better-designed, better-anchored malls or shopping sites. These particular greyfield sites are also referred to as "dead malls" or "ghostboxes" if the anchor or other major tenants have vacated the premises leaving behind empty shells.^[1]

Unlike brownfields (which feature actual or perceived levels of environmental contamination), greyfields typically do not require remediation in order to unlock value to an investor. The hidden value, in many cases, comes from underlying infrastructure (such as plumbing and sewerage, electrical systems, foundations, etc.) the presence of which allows a developer to improve the site efficiently through capital expenditures (sometimes quite minor) that may easily lead to increased rents and greater value. Other important potential qualities include parking, a central location, etc. may also be leveraged in a well-executed redevelopment of the site.

Some greyfields may also be considered favorable to investors because, even though they are outclassed or physically in disrepair, they have revenue in place through long- or short-term leases. Greyfields with short-term leases may work well for an investor/developer who has a strategy involving intensive real estate asset management. By actively managing the greyfield in a short-term lease environment, rents may be increased after improvements are made.

The 'greyfield' term may also be applied more broadly to urban infill or commercial locations where underuse or outdated (non-retail) uses hamper an otherwise valuable real estate asset. An example would be a formerly industrial waterfront site that is potentially valuable as a mixed use/residential site as it is being encroached upon by residential sprawl, or other economic or redevelopment pressures. In this example, the revitalization of the greyfield may require zoning changes and/or a public-private partnership of some kind to achieve the highest and best use.

Background

In 2001, the Congress for the New Urbanism coined the term “greyfield”, which refers to aging strips of development that once served as vital commercial corridors during the post-World War II suburban exodus, but which have today fallen on harder times.^[2] In contrast to contaminated brownfields and undeveloped greenfields, greyfields refer to “so-called “dead malls”, often characterized by the vast empty asphalt parking lots that surround them”.^[3]

The most conservative calculations in 1999 estimated that there would be no fewer than 203 greyfield malls nationwide with a combined outstanding debt of over $2 billion and projected redevelopment costs of over $11 billion by 2004. In 2001, of the 2,000 regional malls nationwide, it was estimated that nearly 20% were greyfield malls or in danger of becoming one.^[4]

The Central City Mall in San Bernardino, California, the Prestonwood Town Center in Dallas, Texas, the Maple Hill Mall in Kalamazoo, Michigan and the Lafayette Plaza in Bridgeport, Connecticut, are all examples of greyfields in cities across the country.^[5]

Characteristics

An average site size of 45 acres. These sites are both smaller and less connected to the regional transportation system than those housing the nation’s best-performing malls, which average over 70 acres in size, with freeway visibility and direct ramp access.^[6]

Located in established neighborhoods and shopping districts... and on suburban arterials with bus service. Many are already bus hubs.^[7]

Have formidable competition. On average, greyfield malls have 2.3 million square feet of competing retail space in 22 other centers within five miles... They are often older and smaller than the most successful malls in their region.^[8]

Conventional renovations will not be sufficient to breathe new life into many properties. A face-lift isn’t going to do much to help. A new anchor store, depending on the center’s position in the market, may not do much either.^[9]

Factors for Redevelopment

Critical factors necessary for the redevelopment of a greyfield site include:

• Market conditions;
• Ownership and anchor tenant status;
• Site and location factors;
• Municipal and community capacity;
• Developer and lender capacity.^[10]

Lessons

Lessons from successful greyfield transformations are based on the case studies of the Paseo Colorado development in Pasadena, California, the City Place development in Long Beach, California, the Belmar development in Lakewood, Colorado, the Downtown Park Forest development in Park Forest, Illinois, the Mizner Park development in Boca Raton, Florida, and the Winter Park Village development in Winter Park, Florida conducted by the Congress for New Urbanism.^[11]

• Incorporate features that will maximize environmental benefits;
• Explore major physical changes;
• Use car parking carefully;
• Incorporate public amenities that add value and distinguish the development;
• Include Civic and Institutional activities;
• Expect a lengthy pre-development period and prepare for complications;
• Establish a high standard for urban design;
• Market the new concept;
• Develop mixed-uses that can thrive independently;
• Patient money is the best fit for town center projects.^[12]

References