Is Housing the Next Play for Vacant Malls?
Tallahassee, Florida – October 16, 2020 –Long live the American mall. These dreamy retail hubs were once bustling scenes of activity, fun, and commerce. If you needed to shop, you went to the nearest mall. There was no question, no contest, and no real competitors. The mall was the golden child of the US retail footprint.
Today’s mall scene has turned bleak as brick and mortar retail has fallen to the wayside in light of e-commerce. An already high vacancy rate of malls has now reached its highest point in 2 decades this year. Due to the Covid-19 pandemic’s massive disruption to physical retail, malls have seen even more closures.
In the past, there has been a lot of talk about the future of vacant mall spaces. From schools to mixed-use centers, the options were at the forefront of CRE retail analyst’s forecasts.
Earlier this year, NAI TALCOR showcased such an example with John McNeill’s transformation of the Centre of Tallahassee (formally the Tallahassee Mall). The Center of Tallahassee currently houses 2 state departments, the Department of Health and the Department of State. The third state department joining them, Department of Children and Family, is scheduled to move in their first phase next month with the balance in Q1 2021. In addition to the 415,000 SF these 3 departments occupy, well known retailers like Barnes and Noble, Cold Stone Creamery, Ross Dress for Less and Guitar Center make up the remaining square-footage of this 900,000+ SF property.
Nowadays, affordable housing is in high demand, and the new move for malls may be decided.
The massive square-footage
currently occupied by dying mall spaces could be reconfigured to give a fresh
spin on commercial real estate. NAI TALCOR has been on the forefront of urban
development. With two of the three Tallahassee malls no longer traditional spaces
(Center of Tallahassee and Northwood Mall), NAI TALCOR looks to Governor’s
Square Mall as the retail climate continues to evolve changes.
A NEW FUTURE FOR MALL SPACES
Housing is being examined as the
next possible phase for mall CRE. The U.S government recently went public with
their prospective plans to convert retail spaces into residential communities. Transitioning empty storefronts into micro-apartments would
flood supply into metropolitan markets, helping to ease the housing shortages
plaguing cities all around the country.
In essence, mall spaces would be transformed into multifamily communities. In many cases, these would become mixed-use developments that blend retail, office, and living spaces all in one set up.
After a few alterations to the
physical space, failing malls could easily be retrofitted into attractive
housing options.
IS HOUSING THE RIGHT MOVE?
There are so many options for the
future of empty malls - is housing really the best bet?
Despite all of the potentials, housing is an imminent need, and malls are inherently built with many of the in-demand resources that housing developers are looking for.
By their very nature, malls do make strong prospects for multifamily projects. Malls are located in centralized areas that are geared around attracting traffic and remaining accessible. In order to accommodate changing tenants, the units are easy to renovate. Malls are also built around public transit options, making transportation a key benefit of these locations.
It’s impossible to deny the fact
that malls hold immense promise in creating community hubs for living and
working.
PAVING THE WAY
In light of the market’s hesitant
response to converting malls into communities, a few brave players have already
made headway into this trend. By taking the first steps, they’re providing a
model for the industry to gauge the reality of these transformational projects.
Keep an eye on the progress of this trend to stay ahead of the curve - it may be one of the biggest areas of opportunity for CRE into 2021 and beyond.
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