Reimagining Malls: A Solution to the Housing Shortage

Welcome to a new era of mall living.

Traditional American shopping centers are undergoing significant changes. Real estate developers are replacing fading department stores with residential units, paving the way for mall-based living becoming a future trend.

Developers in the U.S. are demolishing stores like Macy's and JCPenney to erect apartments, utilizing spaces and parking areas either next to or linked to malls with pathways and green areas. In some scenarios, these residences are incorporated into unused storefronts or repurposed shopping zones that also offer a blend of housing, retail, dining, and leisure activities.

Jacob Knudsen, vice president of development at Macerich, asserts that malls are regaining their charm, particularly as they evolve into lifestyle hubs. He highlights the redevelopment of FlatIron Crossing Mall in Colorado as an example. This trend supports lifestyles integrating living, working, dining, and entertainment in close proximity.

This transformation comes at a pivotal time for malls seizing opportunities to prevent obsolescence. Post-pandemic, consumers still cherish physical shopping, yet the once-dominant department stores have been on a downward trajectory for over two decades.

As retail giants like JCPenney and Sears scale back or disappear, creative solutions are needed to repurpose mall spaces, often occupying half the retail area.

While repurposed mall spaces have included distribution centers and sports facilities, the most rapidly expanding adaptation is residential development. By early 2022, plans were underway for housing in nearly 200 U.S. malls, with over 30 projects already completed since the onset of the pandemic. Numerous additional projects span states like California and Texas.

Oscar Parra from Pacific Retail Capital Partners emphasizes the nation's retail oversupply, fourfold that of any other country, rendering vast mall spaces unnecessary. Transforming these into residential use, like his firm's Chicago-area project, is more beneficial.

For mall proprietors, these projects are feasibly attractive. Despite the persistent popularity of top-tier malls, millions of square feet in U.S. malls remain unclaimed. Many Americans reside within an hour of malls with high vacancy rates.

With a national shortage of 4.5 million homes, integrating residential units in malls seems a logical step. This not only addresses housing needs but revitalizes mall consumer bases.

Knudsen views malls as valuable assets, presenting chances for developers to offer residences with built-in customer traffic.

Challenges of Mall-Integrated Living

Despite the potential, building residential units in malls is not without obstacles. Construction costs are steep, and developers must navigate complex zoning laws, as malls aren't traditionally zoned for such developments. Often, existing structures need demolition to accommodate new housing effectively.

It's challenging to convert older department stores into residential apartments that provide adequate lighting and ventilation due to their structural designs.

Parra suggests detached residences from the main mall complex are usually more practical unless in densely populated urban areas, necessitating integration.

The Experience of Living in a Mall Setting

While mall-based apartments are not yet widespread, they are gradually emerging. Developments like Indianapolis' Lafayette Square and Phoenix's Paradise Valley illustrate this concept with an array of housing options.

A notable example is The Arcade in Providence, which transitioned from a historic mall to housing micro-apartments post-economic downturn. This model offers residents the convenience of on-site amenities while capitalizing on the mall's historical charm.

In Milwaukee, the Grand Avenue Mall adapted similarly, repurposing spaces for modern apartments while retaining some retail spots, thereby maintaining its communal role.

Residents enjoy features such as recreational facilities and easy access to goods and services, reflecting a shift towards lifestyle-centric living environments.

Najla Kayyem from Pacific Retail envisions future mall residences evoking resort-like experiences, streamlining living with a single-account for all activities within the complex, despite the current complexity of such integrations.