Investors interested in purchasing or remodeling distressed shopping malls should carefully consider the costs associated with such projects, the Las Vegas Review-Journal reported.

Though foreign investors looking to acquire solid investments in areas with improving demographics may have the right idea, they need to pay attention to what their return on investment will be after paying for costly upgrades.

The U.S. retail vacancy rate stands around 13 percent and there is little demand for new development, the newspaper said. But if an investor pays $100 million for an existing underperforming shopping center, it may have to unexpectedly shell out millions more to remodel the property.

“What isn’t in the numbers?” asked Ronald Altoon, a Los Angeles architect during a talk at the International Council of Shopping Centers’ RECon 2011 conference in Las Vegas. “When you buy a C property and you want to turn it into a B property, or a B property into an A property, there may be code and zoning issues. You have to look at the physical condition and merchant viability.”

According to John Bemis, director of leasing and development at Jones Lang LaSalle Inc., many retail outlets and shopping malls retooled their spaces and offerings during the recession. However, about one in every four malls now houses at least one unconventional anchor and department stores are still shutting down underperforming locations.

“What about department stores going out of business?” Altoon asked.