By PATRICK LAVERY
“Let’s go to the mall!” wasn’t just a catchphrase popularized by alter-ego Robin Sparkles on the sitcom “How I Met Your Mother.” In the 1980s and 1990s, shoppers flocked to malls to satisfy their needs for a variety of goods, and adolescents went there just to hang out, patronize the food court, and be social.
But sometime in the two decades between the turn of the millennium and the onset of the COVID-19 pandemic, the megamall as an American institution gave way to the likes of Walmart, eBay, and Amazon. It’s gotten to the point where thumbing through slideshows of abandoned malls has become almost as perverse a pleasure as seeing what’s happened to former Olympic venues.
According to Nadia Evangelou, senior economist and director of real estate research for the National Association of Realtors, malls were the only type of retail space NAR tracked in 2022 that yielded negative net absorption.
Overall, net absorption of retail space has been positive for the last eight quarters straight. Evangelou expects that upward trajectory to continue.
“In general, the retail sector is expected to remain strong and perform better than pre-pandemic levels, and with inflation coming down and interest rates stabilizing later this year, consumer spending power will be back in 2023,” she said.
Yet the fact remains that retail malls are not what they used to be. For one thing, the iconic anchor stores that could once be found at all corners have not survived the big box and online revolutions.
Sears prefaced the pandemic by declaring bankruptcy in 2018, with JCPenney and Lord & Taylor following within months of COVID’s onset. And although all three have resurfaced to some degree, it would be a mistake to believe any of those brands still carry the economic heft they once did.
Brick-and-mortar’s resurgence, according to Evangelou, is going to be driven by smaller stores – ones you might see in malls, but also may be able to find closer to home.
So what’s going on in these old malls?
The top repurposing activity for retail malls still comes from new retail space, followed by mixed-use, meaning a combination of retail, residential, office, and warehouse occupancy.
For the latter of those, it’s almost a full-circle moment for retail. Americans used to go to malls to buy what they wanted, but now they could purchase it on Amazon and have their order fulfilled and shipped… from a former mall.
And living inside a place where the public used to shop, eat, try on clothes, and go on dates might seem odd to some, but Evangelou said with fewer homes available either for sale or rent these days, the need for residential real estate is a major consideration.
In Colonial Heights, Va., a January 2022 Planning Commission resolution recommended that the city council authorize the conversion of a former Sears at the Southpark Mall into multi-family apartments.
California and Florida have each considered statewide legislation in the past two years to free up some of this formerly exempted space to be made into new homes.
Adding to that, abandoned malls were a favorite location at various points during the pandemic, first for COVID testing sites, then for vaccine clinics. Evangelou said the medical field is increasing its interest in using these spaces.
Who is making these changes possible?
Government bodies have provided support for the repurposing of malls through financial incentives and streamlining processes for investors.
“One clear insight that comes from the case studies that we listed in our analysis is the vital role of the local government, the state, county, or the city, the local government leading the repurposing effort to bring back economic activity in the area,” Evangelou said.
Evangelou said these projects also need “private development financing that can withstand economic risks.”
“Repurposing large, vacant spaces requires a mix of financing from committed and deep-pocketed investors,” Evangelou said.
What are you seeing in your area? How are malls being repurposed? Let us know. Email [email protected].
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