THE SAGA OF GENERAL GROWTH
The Sacramento Bee reported today that General Growth Properties, Inc., the developer of The Elk Grove Mega Mall, called the Promenade, which remains unfinished, took a big step toward exiting bankruptcy today, but the project remains in limbo. General Growth said it had reached agreement with lenders on more than 90 malls, part of a bankruptcy reorganization plan that would keep the Chicago mall developer largely intact. But the agreement didn’t cover unfinished projects such as the Elk Grove Site known as the Promenade, said Jim Graham, company spokesman.
The company halted construction on the Promenade in October 2008; in February it said the project was on hold indefinitely. Contractor lawsuits and mechanics liens started piling up. The company tried selling the mall site to investors but pulled it off the market several months ago.
Market analysts believe the mall won’t get completed for several years, regardless of what happens to General Growth. There are obviously a variety of factors involved in this, included high unemployment and the State of California’s fiscal crisis.
Graham reportedly said the fate of Elk Grove mall is “subject to market conditions that are unrelated to the bankruptcy.”
General Growth filed for Chapter 11 Bankruptcy in April of 2009, staggered by billions in debts.
It’s uncertain what Mr. Graham meant by “market conditions that are unrelated to the bankruptcy,” but those might include problems in obtaining financing and investment capital. Another factor might be grossly overestimating the region’s ability to absorb growth based on demographics, rather than housing projections. Harry Dent, the same guy who wrote the Roaring 2000s, wrote an interesting book called the “Great Depression Ahead,” in which he predicted a stock market and real estate crash based upon sheer demographics, that the real estate market was bound to decline simply because the baby boomers were starting to retire, and the generation following up behind was smaller in number, and in addition, holds different values and buying habits. As the era of rampant consumerism and free wheeling credit winds down, it appears to be anybody’s guess when, if ever , the project will be completed.