Elk Grove Promenade Developer Faces Lawsuit For Deteriorating Condition Of Mall

Chicago-based General Growth Properties (GGP) is being sued by Dillard Stores over what the retailer characterizes as “ghost town” like conditions of GGP’s Highland Mall in Austin, Tex.

Dillard’s alleges that GGP has let Highland Mall “deteriorate in character and quality such that it is now approximately half vacant." As a remedy, Dillard seeks to terminate a lease it has at the aging regional mall on Austin’s near north side.

Among other things, the suit says that GGP has leased space to stores that undercut Dillard’s such as a discount perfume retailer. The suit also says that GGP’s mixture of stores has hurt the mall’s image by including retailers including one that only sells toilet paper.

Dillard’s is closing several underperforming stores and has included its Highland Mall facility. GGP has declined comment on the suit.

Separately, CNN reports that retail vacancies are accelerating at the quickest pace in at least one decade. According to New York-based real estate research firm Reis, 8.7 million sq. ft. of retail space was vacated in the first quarter of 2009, up from 8.9% for all of 2008.

Reis also reports that mall vacancy rates have risen to 9.8% nationally during the first quarter.

GGP is the developer of The Elk Grove Promenade. Construction of the outdoor mall on Elk Grove’s south side was halted last summer. It is not know when GGP, or any other developer, will resume construction of the facility.