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The American mall, once a dominant force in consumer culture, is transforming dramatically.
As the retail landscape changes, department stores close and e-commerce booms, developers are finding new life for aging properties by turning them into vibrant mixed-use communities.
A growing number of shopping centers include residential units, while apartments and terraced houses are emerging in addition to the remaining shops. This trend, driven by a severe housing shortage across the country, is breathing new life into ailing shopping centers and creating walkable, amenity-rich neighborhoods.
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Amy Henion, a 33-year-old graphic designer, moved to The Arcade Mall in Providence, Rhode Island two years ago. The Arcade, the oldest indoor shopping center in the country, has 48 micro-units on the second and third floors. Henion gave a tour of her 2,500-square-foot apartment on TikTok.
“It’s cool to be part of such a historic building and know that each of these units used to be some kind of store,” Henion told CNBC. “You have access to amenities that you don’t get if you live in a house in the suburbs. For example, if I want to get my hair cut, I can walk down to get my hair cut. If I want to choose lunch, I don’t have to not even to leave the building, even if the weather outside is terrible.”
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The Macerich Co. (NYSE:MAC), a real estate investment trust that owns 45 million square feet of real estate, is redeveloping the FlatIron Crossing Mall in Broomfield, Colorado, to include residential properties.
“The mall is going to be cool again,” Macerich Vice President of Development Jacob Knudsen told CNBC. “So because we can live with it, work with it, play with it, go to restaurants, we definitely see this as a trend.”
At least 192 U.S. malls were planning to add housing as of January 2022, according to real estate consultancy Realogic. At least 33 malls have already completed apartment construction projects since the pandemic began.
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The surge in housing construction is especially evident in states such as California, Florida, Arizona and Texas, where demand for housing is high and the need for innovative solutions is acute.
The shift addresses the housing crisis and revitalizes the shopping experience in malls. By bringing residents closer to shopping, dining and entertainment, developers create self-sustaining communities where people can live, work and play – all within one project.
“There’s just too much retail in the U.S.,” Oscar Parra, director of Pacific Retail Capital Partners’ Special Situations Group, told CNBC. “(It’s) four times higher than any other country. I don’t know of any market that needs a million-square-foot mall.”
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For mall owners, the shift to residential development is a strategic move. While there is still demand for high-quality, top-tier malls, a significant portion of the U.S. retail market is struggling.
Nearly 34 million square feet of retail space is vacant and inactive. A large portion of the U.S. population lives a short distance from a shopping center and faces high vacancy rates, low consumer traffic, or complete abandonment.
According to experts, this trend is likely to continue given the national housing shortage of 4.5 million homes. For developers, including apartments in shopping center redevelopment offers a versatile solution. It not only addresses the critical housing shortage, but also creates an interested audience for the remaining retail and restaurant spaces in the mall.
“Malls are an opportunity,” Knudsen said. “This is an opportunity to find land and have a built-in customer base to get people into the mall.”
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This article Apartment living in shopping centers? – What’s Happening Across America Will Blow Your Mind originally appeared on Benzinga.com
