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Revitalizing the Mall: A New Era of Living Spaces

The quintessential American mall is experiencing a significant transformation as real estate developers adapt aging shopping centers into vibrant living communities. This evolution is marked by the replacement of dwindling department store spaces with residential units, suggesting that the concept of living at the mall may soon become commonplace.

In various parts of the United States, developers have started demolishing large department stores such as Macy’s and JCPenney, utilizing both the retail spaces and adjoining parking lots to construct apartment buildings. Some have taken creative approaches, converting empty storefronts or repurposing entire shopping centers into mixed-use environments that blend residential, retail, and recreational spaces.

“The mall is becoming cool again,” remarked Jacob Knudsen, vice president of development for Macerich. His firm is currently revitalizing the FlatIron Crossing Mall in Broomfield, Colorado, to incorporate housing into the project. “The trend is clearly towards living, working, and having fun all in proximity to each other,” he added.

This renewed vision for malls arises as shopping centers across the nation strive to remain relevant amidst changing consumer habits. Despite a resurgence in in-person shopping post-COVID, the traditional anchor department store has been in decline since the early 2000s, losing its former appeal.

With giants like Macy’s, JCPenney, and Sears either contracting significantly or disappearing altogether, real estate developers are compelled to innovate. They are recognizing that these once-vital retail spaces, which often occupy substantial portions of a mall, offer opportunities for alternative uses. The trend is marked by a growing inclination towards residential developments — a pressing need in light of the current housing crisis. According to real estate consultancy Realogic, as of early 2022, 192 U.S. malls had plans to incorporate housing, while at least 33 had completed residential projects since the pandemic began.

“There’s simply too much retail in the U.S.,” stated Oscar Parra, principal at Pacific Retail Capital Partners. “The scale of retail space here is disproportionate compared to other nations.” He pointed to ongoing multifamily housing projects within established malls, including one at a former Carson’s location near Chicago and another at Westfield’s Garden State Plaza in New Jersey.

Reimagining Malls for Modern Living

For mall owners and developers, the math surrounding this shift is compelling. While high-end malls remain desirable, approximately 34 million square feet of mall space is currently vacant in the U.S. Many Americans reside within a reasonable distance from malls suffering low traffic or even abandonment.

Amid a national housing shortage of about 4.5 million units, these developments not only fulfill a vital need but may also drive foot traffic back to remaining retail stores and eateries within mall complexes. Knudsen better encapsulated this vision, noting, “Malls represent an opportunity to draw in residents who, in turn, can support the mall’s economic ecosystem.”

Yet, the process of transforming traditional mall spaces into housing is not without its challenges. The complexity of construction costs and zoning laws, combined with outdated lease structures, can hinder such initiatives, particularly since many shopping malls are not pre-zoned for multifamily units. Furthermore, the unique layout of malls typically necessitates extensive renovations or demolitions to effectively incorporate residential living.

“What we’ve discovered is that it’s often better to segregate the residential component from the mall itself,” Parra explained. “In urban settings, integration may be desirable, but more often, it’s about tearing down the old structures to build something new, ideally separated from the active mall environment.” This strategy allows for better access to natural light in living spaces, a critical factor for residential design.

Exploring Life in the Malls

While the trend of mall-living is still developing, several notable projects are underway. The Lafayette Square Mall in Indianapolis plans to introduce 1,200 housing units, including affordable options, by 2025. Recently, the Paradise Valley Mall in Phoenix opened 400 luxury apartments, demonstrating the growing acceptance of this new residential concept.

The Arcade, located in Providence, Rhode Island, showcases an earlier example of this shift. Once the oldest indoor shopping mall in the country, it faced severe decline after the Great Recession. To combat this, developers implemented a creative transformation, converting the upper levels into 48 micro-apartments, allowing residents to enjoy easy access to the city’s amenities.

Residents appreciate the unique locale. Amy Henion, who lives in The Arcade, shared, “Living here is fascinating, as each apartment was previously a retail space. The convenience of having shops and services right at my door is something that traditional suburban living lacks.” Similarly, Scott Sheehan, who bought an apartment for investment purposes, highlighted the appeal for tourists, emphasizing its proximity to key local attractions.

The Grand Avenue Mall in Milwaukee is another prime example. After falling into disrepair, its conversion into living spaces included adding apartments where once bustling retail shops stood. Tenants enjoy modern amenities, like a pickleball court and fitness center, while maintaining easy access to remaining stores and restaurants. However, the layout presents unique challenges, such as public visibility into some apartments, which can create privacy issues for residents.

Throughout this transition, amenities play a pivotal role in attracting residents. Najla Kayyem, executive vice president of Pacific Retail, emphasized the importance of convenience in creating these living spaces. Future aspirations include seamless living experiences akin to resort stays, where all purchases could be charged to a single account.

As these developments continue to unfold, the landscape of American retail spaces is transforming, reshaping not only our shopping habits but how we think about living environments.

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