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Retail Traffic

Eminently Unfair

The Supreme Court ruling in late June that permitted condemnation of private property for economic development got a thumbs down from readers of Retail Traffic, who overwhelmingly said it sets a precedent that could work against property owners. They said they feared that big developers could now convince municipalities to seize small retail properties. In their comments, many also decried the loss of private property rights.

In Retail Traffic's exclusive online poll of 200 retail real estate and retail executives as well as architects, 84.5 percent said they strongly disagree with the U.S. Supreme Court's 5-4 decision in the Kelo v. City of New London.

One troubling aspect of the ruling, respondents said, was that it puts smaller and underperforming projects at risk. Almost 93 percent said that developers with plans for larger works could come along, and with the aid of the state, take other developers' land. This seems more likely given the diminishing supply of available greenfield sites.

“This is dangerous because it can pit developers against each other,” wrote one reader. “Whoever is close to the municipal officials wins.”

The respondents offered these objections even though 83 percent said they thought the ruling would help in getting other projects built, and 35 percent said that they have looked at projects that would benefit from the use of eminent domain.

Defending Property Rights

Most respondents felt it was an abridgement of personal property rights, which they viewed as more important to their businesses and the nation than ease of development.

“Property rights are the cornerstone of our business and our society,” one reader wrote. “This [project in New London] shows a developer's staggering hypocrisy and stunning shortsightedness.”

“While this may help some individual projects, it is so very wrong for the rich and powerful to be able to seize the property of less well-connected,” said another respondent.

Readers overwhelmingly said that the ruling could be used to level older shopping centers to make way for mixed-use urban projects in the Northeast, where land is increasingly hard to come by.

A whopping 69.6 percent said mixed-use development would benefit (though many nonetheless opposed the land grab), versus 17 percent for big boxes and 6.7 percent for regional malls. Meanwhile, 71.7 percent thought the Northeast was the most likely battleground. No other region drew more than 5.7 percent.

With the Kelo decision, economic development is now loosely defined as a legitimate “public use,” making it easier for cities to condemn parcels of property so private developers can build on them. In the past, condemnation was typically reserved to clear the way for public uses such as roads and highways.

In her dissent, Justice Sandra Day O'Connor cautioned, “the specter of condemnation hangs over all property. Nothing is to prevent the state from replacing any Motel 6 with a Ritz-Carlton, any home with a shopping mall, or any farm with a factory.” Chief Justice William Rehnquist and Justices Antonin Scalia and Clarence Thomas also joined the dissent.

At press time, Kelo was preparing an appeal of the ruling.

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