Transwestern today released a report that examines the narrative behind national retail performance and the growing trend of repurposing regional malls for other commercial real estate uses. The report, titled Why Mall Reuse Is Just Beginning, explains that while the retail sector certainly faces challenges, the idea that all regional malls are obsolete is simply not accurate.
“The assumptions that all purchases are moving online, all retailers are going bankrupt, and all millennials reject the suburban mall and the lifestyle it represents are grossly exaggerated,” said Brian Landes, the report’s author and Director of GIS/Location Intelligence for Transwestern. “Furthermore, we’ve seen that when malls are reconsidered and repurposed for other uses, their value may far exceed their use as conventional retail space.”
Despite the growing focus on malls’ demise, the reality is not as dismal as it may appear:
- • Regional malls have had positive net absorption since 2010, with the only blip in absorption occurring in 2009, at the height of the recession.
- • In 2016, the U.S. retail market experienced 105 million square feet of net absorption, representing a growth in occupancy of nearly 1 percent.
- • At the end of 2016, mall occupancy across the U.S. was above 95 percent, equating to 848 million square feet of space.
- • Mall productivity has remained relatively steady and rose 0.7% in the last year to $465 per square foot.
“While we’ve seen store closures increase in 2017, for the most part, malls are attracting new tenants through strategic marketing and property enhancements,” said Nick Hernandez, Managing Director of Retail for Transwestern. “And in cases where a retail mall no longer makes sense, we have seen many owners successfully adapt to the changes in their trade areas by repurposing the mall for another use.”
The regional mall is increasingly attracting office, medical and community users. Malls are also seeing their parking redeveloped into multifamily, office buildings and hotels, among other uses. The success of these projects depends greatly on the underlying demographic research and financial analysis that drives conversion.
“Mall reuse has a high chance of success because they typically are located in desirable areas with good traffic patterns, high visibility and ample parking,” Landes said. “A creative approach based on a thorough analysis of the market data is allowing the regional mall – which really took off in the 1950s – to evolve into a new type of gathering place that meets the needs of its community.”
In addition to exploring the current state of retail, the report provides examples of regional malls that were successfully reimagined as places for education, healthcare, entertainment, office and multifamily space. Read the full report at http://twurls.com/mall-reuse.
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