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Abandoned Retail Sites Become Senior Housing

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George and Pat Ritzinger moved five years ago to a community that few would initially consider a retirement mecca: a former shopping center site in Wayzata, Minn. They had spent the previous 15 years in a townhouse development in the Minneapolis-St. Paul area, yet found the atmosphere chilly.

“The neighbors were unfriendly,” Mr. Ritzinger, 85, said. “It was a struggle to organize social gatherings. Watching garage doors open was the main excitement.”

In their current community, Folkestone, they can walk to shopping and other amenities and engage in numerous activities. A bonus: They are close to family.

There is little denying that a vast amount of retail space is emptying during the coronavirus pandemic — 25,000 stores may close by the end of this year — all while the over-65 population is increasing by about 10,000 a day. So even though arena-like malls and strip shopping centers might never see another Sears, J.C. Penney or Lord & Taylor store, some are being transformed into something more interesting: comprehensive upscale retirement complexes.

Born and raised in the Philadelphia suburbs, the Ritzingers moved to the Twin Cities in 1974 for his job as a sales executive for DuPont. After living unhappily in a 16-unit townhouse complex in nearby Eden Prairie, they decided to move; Mr. Ritzinger created a spreadsheet to keep track of places that had the features they desired.

Besides being close to shopping, dining and recreation, the couple can hop on a Folkestone bus that takes them around town. And Mr. Ritzinger can keep up with his woodworking hobby in the community’s wood shop.

To accommodate residents during the unforgiving Minnesota winters, skyways connect the three senior buildings in the expanding development. “Wayzata is a delightful place,” Ms. Ritzinger, 84, said. “We can look out on a lake, and our sons and grandsons are nearby.”

The senior-living section of Folkestone is run by Presbyterian Homes & Services, which owns 49 properties in Minnesota, Iowa and Wisconsin. The home uses the continuing-care communities model, in which residents can move to assisted living or skilled nursing care as their needs change. Folkestone is part of the Promenade development, which includes shopping, beauty and wellness services.

Like hundreds of retail redevelopments underway around the country, the Ritzingers’ apartment sits on land that was home to a shopping mall built in 1967. It was demolished in 2012, and Folkestone opened in 2013.

The factors driving retail-to-housing transformation were set in motion years ago but have been accelerated by the pandemic. The demise of malls and shopping centers has also been amplified by the shift to online retailing in recent years.

The crisis in mainstream retailing has become an outsize challenge and opportunity for municipalities, real estate owners, managers and developers. More than 8,000 stores have closed so far in 2020, according to Coresight Research, after 9,500 shut down last year. Mall stalwarts like Bed Bath & Beyond, GNC, Pier One Imports, Men’s Wearhouse, and New York and Company are in various states of bankruptcy and reorganization. Department stores such as Neiman Marcus and Lord & Taylor are on a long list of retailers going through shutdowns.

Ellen Dunham-Jones, a professor at the Georgia Institute of Technology, has researched the repurposing trend. Retail closings across the country have led to 400 proposals for retrofits, with some 315 projects completed or in progress. Notable examples include the Ridge House Apartments in Wheat Ridge, Colo.; the PathStone Skyview Park Apartments in Irondequoit, N.Y. (occupying an old Sears site); and Aljoya Thornton Place, on the former parking lot of the Northgate Mall in Seattle, which was one of the nation’s first regional shopping malls and is still in business.

Professor Dunham-Jones writes about Folkestone in “Case Studies in Retrofitting Suburbia,” her upcoming book with Prof. June Williamson of City University of New York. She noted that the complex, in addition to occupying a former retail site, took a more progressive turn in its design.

Seniors are increasingly demanding more activities and environmentally sensitive and walkable communities, rather than sequestered, gated or golf course developments that require driving everywhere, Professor Dunham-Jones found.

“Baby boomers don’t want to be isolated,” she added. “They want to be connected to the community.”

While it takes years to plan, finance and approve retail redevelopments, “communities are cognizant of the need for rebuilding initiatives for their vulnerable populations,” said Emily Roberts, an assistant professor in the College of Education and Human Services at Oklahoma State University.

She is a consultant on a plan for Crossroads Mall in Oklahoma City, a site that its owners have been struggling to redevelop. A rebranding in 2017 failed, and now the community is working to turn the 800,000-square-foot site into a facility modeled after a Dutch community that is customized for people with dementia.

“Our goal is to create a mixed-use city center model in which residents can remain engaged and active throughout their day,” Professor Roberts said. “Malls give us the space we need to rethink dementia care, repurposing the cavernous interiors while creating outdoor spaces which are connected to the adjacent housing.”

What can you expect when considering a shopping center redevelopment? Continuing-care communities can be pricey. As a rule, you will pay more for independent living developments than for conventional retirement or assisted-living communities, and even more for stepped-up levels of care from assisted living to memory care. In addition to monthly charges, you can pay an upfront fee from $100,000 to $1 million to get into continuing-care communities — a common economic model used to cover the total cost of care.

In the Promenade-Folkestone complex, the Ritzingers rent month to month and had a choice of 40 floor plans. They pay $4,360 a month for a two-bedroom apartment with a sunroom overlooking Lake Minnetonka, and paid an entrance deposit of $217,000, which reduces their rent and is refundable when they vacate that apartment.

Monthly rents at Folkestone range from $2,210 for a one-bedroom apartment to $6,810 for a two-bedroom with a library and a sunroom. Required deposits range from $95,000 to $328,000. (The cost escalates with the larger units and level of care.) The fees cover all utilities, maintenance and taxes.

Of course, there are countless variations for senior living. You could even live in luxurious independent-living villas within senior communities, or in mega-complexes like the Villages, north of Orlando, Fla., although most in-home care services are a la carte.

Services and facilities are much more expensive in large urban areas, which prompts a broader question: Will this new wave of retail-to-residence transformation produce enough affordable senior housing for the future?

More than half of middle-income American seniors — some eight million — are not going to be able to afford basic assisted-living residences, according to a National Opinion Research Center survey. Although people may relish being able to walk to amenities and shopping, the important question is: Will they be able to afford the upscale lifestyle of a repurposed setting? Changes afoot in the new redevelopments may address that issue, although only partly.

Strategic locations will make a difference, Professor Dunham-Jones is finding.

“By locating senior housing in walking distance of shops, libraries, gyms and recreation centers, the housing no longer needs to provide those amenities internally and may reduce costs accordingly,” she said.

For the Victory Centre, on the site of the former Park Forest Plaza shopping center in Illinois, “the municipality owned the land and played an important role in insuring affordability,” she said.

The only thing that’s undeniable is the demographic wave that shows the expanding need for senior housing: The 75-and-over population alone will grow by five million in the next five years, according to Marcus and Millichap, a commercial real estate firm.

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The Trump campaign celebrated a growth record that Democrats downplayed.

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The White House celebrated economic growth numbers for the third quarter released on Thursday, even as Joseph R. Biden Jr.’s presidential campaign sought to throw cold water on the report — the last major data release leading up to the Nov. 3 election — and warned that the economic recovery was losing steam.

The economy grew at a record pace last quarter, but the upswing was a partial bounce-back after an enormous decline and left the economy smaller than it was before the pandemic. The White House took no notice of those glum caveats.

“This record economic growth is absolute validation of President Trump’s policies, which create jobs and opportunities for Americans in every corner of the country,” Mr. Trump’s re-election campaign said in a statement, highlighting a rebound of 33.1 percent at an annualized rate. Mr. Trump heralded the data on Twitter, posting that he was “so glad” that the number had come out before Election Day.

The annualized rate that the White House emphasized extrapolates growth numbers as if the current pace held up for a year, and risks overstating big swings. Because the economy’s growth has been so volatile amid the pandemic, economists have urged focusing on quarterly numbers.

Those showed a 7.4 percent gain in the third quarter. That rebound, by far the biggest since reliable statistics began after World War II, still leaves the economy short of its pre-pandemic levels. The pace of recovery has also slowed, and now coronavirus cases are rising again across much of the United States, raising the prospect of further pullback.

“The recovery is stalling out, thanks to Trump’s refusal to have a serious plan to deal with Covid or to pass a new economic relief plan for workers, small businesses and communities,” Mr. Biden’s campaign said in a release ahead of Thursday’s report. The rebound was widely expected, and the campaign characterized it as “a partial return from a catastrophic hit.”

Economists have warned that the recovery could face serious roadblocks ahead. Temporary measures meant to shore up households and businesses — including unemployment insurance supplements and forgivable loans — have run dry. Swaths of the service sector remain shut down as the virus continues to spread, and job losses that were temporary are increasingly turning permanent.

“With coronavirus infections hitting a record high in recent days and any additional fiscal stimulus unlikely to arrive until, at the earliest, the start of next year, further progress will be much slower,” Paul Ashworth, chief United States economist at Capital Economics, wrote in a note following the report.

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Black and Hispanic workers, especially women, lag in the U.S. economic recovery.

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The surge in economic output in the third quarter set a record, but the recovery isn’t reaching everyone.

Economists have long warned that aggregate statistics like gross domestic product can obscure important differences beneath the surface. In the aftermath of the last recession, for example, G.D.P. returned to its previous level in early 2011, even as poverty rates remained high and the unemployment rate for Black Americans was above 15 percent.

Aggregate statistics could be even more misleading during the current crisis. The job losses in the initial months of the pandemic disproportionately struck low-wage service workers, many of them Black and Hispanic women. Service-sector jobs have been slow to return, while school closings are keeping many parents, especially mothers, from returning to work. Nearly half a million Hispanic women have left the labor force over the last three months.

“If we’re thinking that the economy is recovering completely and uniformly, that is simply not the case,” said Michelle Holder, an economist at John Jay College in New York. “This rebound is unevenly distributed along racial and gender lines.”

The G.D.P. report released Thursday doesn’t break down the data by race, sex or income. But other sources make the disparities clear. A pair of studies by researchers at the Urban Institute released this week found that Black and Hispanic adults were more likely to have lost jobs or income since March, and were twice as likely as white adults to experience food insecurity in September.

The financial impact of the pandemic hit many of the families that were least able to afford it, even as white-collar workers were largely spared, said Michael Karpman, an Urban Institute researcher and one of the studies’ authors.

“A lot of people who were already in a precarious position before the pandemic are now in worse shape, whereas people who were better off have generally been faring better financially,” he said.

Federal relief programs, such as expanded unemployment benefits, helped offset the damage for many families in the first months of the pandemic. But those programs have mostly ended, and talks to revive them have stalled in Washington. With virus cases surging in much of the country, Mr. Karpman warned, the economic toll could increase.

“There could be a lot more hardship coming up this winter if there’s not more relief from Congress, with the impact falling disproportionately on Black and Hispanic workers and their families,” he said.

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Ant Challenged Beijing and Prospered. Now It Toes the Line.

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As Jack Ma of Alibaba helped turn China into the world’s biggest e-commerce market over the past two decades, he was also vowing to pull off a more audacious transformation.

“If the banks don’t change, we’ll change the banks,” he said in 2008, decrying how hard it was for small businesses in China to borrow from government-run lenders.

“The financial industry needs disrupters,” he told People’s Daily, the official Communist Party newspaper, a few years later. His goal, he said, was to make banks and other state-owned enterprises “feel unwell.”

The scope of Mr. Ma’s success is becoming clearer. The vehicle for his financial-technology ambitions, an Alibaba spinoff called Ant Group, is preparing for the largest initial public offering on record. Ant is set to raise $34 billion by selling its shares to the public in Hong Kong and Shanghai, according to stock exchange documents released on Monday. After the listing, Ant would be worth around $310 billion, much more than many global banks.

The company is going public not as a scrappy upstart, but as a leviathan deeply dependent on the good will of the government Mr. Ma once relished prodding.

More than 730 million people use Ant’s Alipay app every month to pay for lunch, invest their savings and shop on credit. Yet Alipay’s size and importance have made it an inevitable target for China’s regulators, which have already brought its business to heel in certain areas.

These days, Ant talks mostly about creating partnerships with big banks, not disrupting or supplanting them. Several government-owned funds and institutions are Ant shareholders and stand to profit handsomely from the public offering.

The question now is how much higher Ant can fly without provoking the Chinese authorities into clipping its wings further.

Excitable investors see Ant as a buzzy internet innovator. The risk is that it becomes more like a heavily regulated “financial digital utility,” said Fraser Howie, the co-author of “Red Capitalism: The Fragile Financial Foundation of China’s Extraordinary Rise.”

“Utility stocks, as far as I remember, were not the ones to be seen as the most exciting,” Mr. Howie said.

Ant declined to comment, citing the quiet period demanded by regulators before its share sale.

The company has played give-and-take with Beijing for years. As smartphone payments became ubiquitous in China, Ant found itself managing huge piles of money in Alipay users’ virtual wallets. The central bank made it park those funds in special accounts where they would earn minimal interest.

After people piled into an easy-to-use investment fund inside Alipay, the government forced the fund to shed risk and lower returns. Regulators curbed a plan to use Alipay data as the basis for a credit-scoring system akin to Americans’ FICO scores.

China’s Supreme Court this summer capped interest rates for consumer loans, though it was unclear how the ceiling would apply to Ant. The central bank is preparing a new virtual currency that could compete against Alipay and another digital wallet, the messaging app WeChat, as an everyday payment tool.

Ant has learned ways of keeping the authorities on its side. Mr. Ma once boasted at the World Economic Forum in Davos, Switzerland, about never taking money from the Chinese government. Today, funds associated with China’s social security system, its sovereign wealth fund, a state-owned life insurance company and the national postal carrier hold stakes in Ant. The I.P.O. is likely to increase the value of their holdings considerably.

“That’s how the state gets its payoff,” Mr. Howie said. With Ant, he said, “the line between state-owned enterprise and private enterprise is highly, highly blurred.”

China, in less than two generations, went from having a state-planned financial system to being at the global vanguard of internet finance, with trillions of dollars in transactions being made on mobile devices each year. Alipay had a lot to do with it.

Alibaba created the service in the early 2000s to hold payments for online purchases in escrow. Its broader usefulness quickly became clear in a country that mostly missed out on the credit card era. Features were added and users piled in. It became impossible for regulators and banks not to see the app as a threat.

ImageAnt Group’s headquarters in Hangzhou, China.
Credit…Alex Plavevski/EPA, via Shutterstock

A big test came when Ant began making an offer to Alipay users: Park your money in a section of the app called Yu’ebao, which means “leftover treasure,” and we will pay you more than the low rates fixed by the government at banks.

People could invest as much or as little as they wanted, making them feel like they were putting their pocket change to use. Yu’ebao was a hit, becoming one of the world’s largest money market funds.

The banks were terrified. One commentator for a state broadcaster called the fund a “vampire” and a “parasite.”

Still, “all the main regulators remained unanimous in saying that this was a positive thing for the Chinese financial system,” said Martin Chorzempa, a research fellow at the Peterson Institute for International Economics in Washington.

“If you can’t actually reform the banks,” Mr. Chorzempa said, “you can inject more competition.”

But then came worries about shadowy, unregulated corners of finance and the dangers they posed to the wider economy. Today, Chinese regulators are tightening supervision of financial holding companies, Ant included. Beijing has kept close watch on the financial instruments that small lenders create out of their consumer loans and sell to investors. Such securities help Ant fund some of its lending. But they also amplify the blowup if too many of those loans aren’t repaid.

“Those kinds of derivative products are something the government is really concerned about,” said Tian X. Hou, founder of the research firm TH Data Capital. Given Ant’s size, she said, “the government should be concerned.”

The broader worry for China is about growing levels of household debt. Beijing wants to cultivate a consumer economy, but excessive borrowing could eventually weigh on people’s spending power. The names of two of Alipay’s popular credit functions, Huabei and Jiebei, are jaunty invitations to spend and borrow.

Huang Ling, 22, started using Huabei when she was in high school. At the time, she didn’t qualify for a credit card. With Huabei’s help, she bought a drone, a scooter, a laptop and more.

The credit line made her feel rich. It also made her realize that if she actually wanted to be rich, she had to get busy.

“Living beyond my means forced me to work harder,” Ms. Huang said.

First, she opened a clothing shop in her hometown, Nanchang, in southeastern China. Then she started an advertising company in the inland metropolis of Chongqing. When the business needed cash, she borrowed from Jiebei.

Online shopping became a way to soothe daily anxieties, and Ms. Huang sometimes racked up thousands of dollars in Huabei bills, which only made her even more anxious. When the pandemic slammed her business, she started falling behind on her payments. That cast her into a deep depression.

Finally, early this month, with her parents’ help, she paid off her debts and closed her Huabei and Jiebei accounts. She felt “elated,” she said.

China’s recent troubles with freewheeling online loan platforms have put the government under pressure to protect ordinary borrowers.

Ant is helped by the fact that its business lines up with many of the Chinese leadership’s priorities: encouraging entrepreneurship and financial inclusion, and expanding the middle class. This year, the company helped the eastern city of Hangzhou, where it is based, set up an early version of the government’s app-based system for dictating coronavirus quarantines.

Such coziness is bound to raise hackles overseas. In Washington, Chinese tech companies that are seen as close to the government are radioactive.

In January 2017, Eric Jing, then Ant’s chief executive, said the company aimed to be serving two billion users worldwide within a decade. Shortly after, Ant announced that it was acquiring the money transfer company MoneyGram to increase its U.S. footprint. By the following January, the deal was dead, thwarted by data security concerns.

More recently, top officials in the Trump administration have discussed whether to place Ant Group on the so-called entity list, which prohibits foreign companies from purchasing American products. Officials from the State Department have suggested that an interagency committee, which also includes officials from the departments of defense, commerce and energy, review Ant for the potential entity listing, according to three people familiar with the matter.

Ant does not talk much anymore about expanding in the United States.

Ana Swanson contributed reporting.

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