sacramentobankruptcyblog.com

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.

paulbar Uncategorized Baby Boomers, Bankruptcy Reorganization, Chapter 11 Bankruptcy, Chicago Mall, Company Spokesman, Elk Grove, Elk Grove Mall, Estate Crash, Fiscal Crisis, General Growth Properties, General Growth Properties Inc, Great Depression, Harry Dent, Mall Developer, Market Analysts, Mechanics Liens, Mega Mall, Reorganization Plan, Roaring 2000s, Sacramento Bee, Unfinished Projects

The Saramento Bee ran a number of interesting articles recently which contrasted the decline in the housing market, the fall from grace of local Titans Reynand & Bardis, CC Meyers and others, at the same time as “Active Adult” living seems to be doing quite well.  The question I had in the early 2000′s when houses were growing faster than weeds in Roseville, Lincoln, and Elk Grove, was how many people can afford these kind of houses.  Well the answer was, not that many.  Harry Dent wrote an interesting book called the Great Depression Ahead (he was the same guy who wrote The Roaring 2000′s, if you’ll recall) and one of the significant things he points out that the housing boom was caused by simple  demographics, baby boomers raising families, upsizing and acquiring stuff.  But as the Baby Booms started to leave the job market and started becoming empty nesters and moving to retirement or active adult communities, there was going to be less of a demand for consumers goods and upscale housing.  Gen Xers following behind, are fewer in number and also have different lifestyle values, perhaps not as family oriented and not holding the same kind of materialistic work ethic.

So as developers like Angelo Tskapolous, Pulte and Centex acquire properties to develop at bargain basement prices, and new players enter the market, what kind of housing do they plan to build?  Not only was the housing market artificially overpriced, it appears to have been grossly overbuilt, so if you’re are going to build today, the successful market is going to consider the market, and build what people want to buy, not what they want to sell based on how much profit can be made on large houses.  It appears the housing trend will be toward smaller, lower maintenance living.  If the real estate industry is going to recover, it is going to have consider marketing demographics and do a better job in feasibility studies.

paulbar Uncategorized Active Adult Communities, Baby Boomers, Bardis, Bargain Basement Prices, Booms, Centex, Elk Grove, Empty Nesters, Fall From Grace, Feasibility Studies, Great Depression, Harry Dent, Housing Market, Lifestyle Values, Marketing Demographics, Pulte, Saramento Bee, Significant Things, Upsizing, Work Ethic