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The American shopping mall, once a dominant force in consumer culture, is being dramatically transformed.
As the retail landscape changes with the closure of department stores and the rise of e-commerce, developers are finding new life for older properties by turning them into vibrant mixed-use communities.
An increasing number of shopping centers are incorporating residential units, with apartments and townhouses springing up alongside the remaining retail stores. The trend, fueled by a severe housing shortage across the country, is breathing new life into struggling 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 250-square-foot apartment on TikTok.
“It’s cool to be a part of such a historic building and know that each of these units used to be a store of some kind,” Henion told CNBC. “You have access to services that you don’t have if you just live in a house in a suburb, like if I want to get a haircut, I can go downstairs and get a haircut. If I want to choose After finishing lunch, I don’t even have to leave the building , even if the weather outside is terrible.”
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Macerich Co. (NYSE:MAC), a real estate investment trust that owns 45 million square feet of real estate, is redeveloping the FlatIron Crossing shopping center in Broomfield, Colorado, to include housing.
“The mall is coming back into fashion,” Macerich vice president of development Jacob Knudsen told CNBC. “So being able to live, work, play, go to restaurants, we’re definitely seeing this as a trend.”
According to real estate consulting firm Realogic, in January 2022, at least 192 American shopping centers planned to add housing units. Since the start of the pandemic, at least 33 shopping centers have already completed apartment construction projects.
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The increase in residential development is particularly evident in states such as California, Florida, Arizona and Texas, where the demand for housing is high and the need for innovative solutions is acute.
The change addresses the housing crisis and revitalizes the retail experience in shopping centers. By bringing residents closer to shopping, dining and entertainment, developers are creating self-sustaining communities where people can live, work and play, all within a single development.
“There is simply too much retail in the United States,” Oscar Parra, director of the Special Situations Group at Pacific Retail Capital Partners, told CNBC. “(It’s) like four times higher than any other nation. I don’t know of any market that needs a million-square-foot shopping center.”
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For shopping center owners, the shift toward residential development is a strategic move. While upscale shopping centers remain in demand, a significant portion of the U.S. shopping center market is struggling.
Nearly 34 million square feet of mall space is empty and idle. A large portion of the American population lives within walking distance of a shopping center that experiences high vacancy rates, little consumer traffic, or complete abandonment.
According to experts, this trend is likely to continue considering the nationwide housing deficit of 4.5 million homes. For developers, adding apartments to the mall redevelopment offers a multi-faceted solution. Not only does it address the critical housing shortage, but it also creates a captive 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 attract people to the mall.”
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This article Living in apartments in shopping centers? – What’s happening across America will blow your mind originally appeared on Benzinga.com
