The Dying Mall’s New Lease on Life: Apartments

[M II A II R II K]

The Dying Mall’s New Lease on Life: Apartments


June 30, 2020

By Patrick Sisson

Read More: https://www.bloomberg.com/news/artic...-into-housing?

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More than half of all U.S. department stores in malls will be gone by 2021, one real estate research firm predicts, and surviving retailers may not be far behind; once-mighty brands such as Cheesecake Factory and the Gap are skipping rent payments, Starbucks is closing physical locations, and developers see a future for big box stores as office complexes. Banks fear “a stampede” of landlords looking to restructure loans after commercial tenants miss their rents. Last week, the Trump administration floated the idea of turning the glut of empty retail space into affordable housing.

- At the Alderwood Mall in Lynnwood, a suburb north of Seattle, an adaptive reuse project already in progress suggests that America’s vast stock of fading shopping infrastructure could indeed get a second life as places to live. Such transformation could even bring malls closer to the “village square” concept they were initially envisioned to become. --- Developers are turning a wide swath of the 41-year-old shopping center into Avalon Alderwood Place, a 300-unit apartment complex with underground parking. The project won’t completely erase the shopping side of the development: Commercial tenants will still take up 90,000 square feet of retail. But when the new Alderwood reopens, which developers expect will happen by 2022, the focus will have shifted dramatically. One of the mall’s anchor department stores, Sears, shut down last year; in a sense, the apartment complex will be the new anchor.

- Lynnwood may offer an ideal testing ground for the long-term opportunities in large-scale suburban mall-to-housing conversion. The suburb of roughly 40,000 people is a commuter bedroom community for Seattle, which has been struggling mightily with a severe housing shortage. The mall had plenty of vacant real estate needed for new homes. And a planned expansion of light rail from Seattle to Lynnwood in 2024, part of the region’s Sound Transit Extension Phase 2, will make market-rate apartments even more attractive for residents who commute to jobs downtown or at the Boeing or Microsoft campuses. --- “There have been some great examples of this kind of redevelopment, such as Tyson’s Corner in Virginia, but it’s very specific to individual cases, and very expensive,” says Nick Egelanian, president of retail consultancy SiteWorks, who predicts up to a third of malls will be vacant due to the economic fallout from the pandemic. “If it’s a good location, you can backfill that with residential, hotel, office and entertainment.”

- Converting commercial real estate to housing may be the best use of land in such an over-retailed country. Big shopping centers tend to be centrally located and connected to transit. --- Excess retail space at malls becoming more adaptive, and filling uses that aren’t hospitality focused, such as residential, or even flex or warehouse space. During a time of housing shortages, Lake believes that transforming empty commercial buildings is a “moral imperative.” --- Lynnwood is a middle- to low-income suburb, with lots of service workers, so the city is working on a housing action plan to make sure social services and education arrive in the community, not just new apartments. The mall may be evolving, but the desire, and challenges, in creating a community-oriented development still remain. You can have acres and acres of housing, but without a community, is it a place? Does it fulfill somebody’s experience? We want to be more than that.

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Developers are converting part of the 41-year-old Alderwood Mall outside of Seattle into housing — a sign of what might be a national trend. Rendering courtesy Brookfield Properties Inc.

[TexasPlaya]

It's already a national trend in places that are growing and have older malls. Here in Texas, grocery anchored retail has replaced the big box anchored retail.

[dave8721]

The Shops at Sunset Place in South Miami will demolish half of the early 2000's style "lifestyle center" mall and replace it with apartments and a hotel geared to nearby UM. The existing mall actually replaced a previous failed 1980s mall

Current Mall (north half will be demolished):
https://www.google.com/maps/place/Su...!4d-80.2868749

To be replaced with:
https://somimag.com/third-times-the-charm/

[strongbad635]

Originally Posted by dave8721

The Shops at Sunset Place in South Miami will demolish half of the early 2000's style "lifestyle center" mall and replace it with apartments and a hotel geared to nearby UM. The existing mall actually replaced a previous failed 1980s mall

Current Mall (north half will be demolished):
https://www.google.com/maps/place/Su...!4d-80.2868749

To be replaced with:
https://somimag.com/third-times-the-charm/

This is SO long overdue. Sunset Place opened during my freshman year at Miami, and though we were impressed by the bustling atmosphere, it was clear that something was missing (people living in the space). I visited Miami in January to re-connect with old college friends and the most shocking thing I witnessed was how utterly dead and dumpy Sunset Place had become. It's in a perfect spot for good TOD and I'm so glad to see it's going to happen.

[DCReid]

In Alexandria VA, Howard Hughes owns the Landmark Mall and every store has closed except for Sears. They have talked about re=developing it to multi-use since the early 2010's but nothing has happened. This is surprising given how strong the DC retail and housing markets have been in recent years. I wonder if Sears is causing the delay - I heard they own the land and building of their stores even in malls.

[Pedestrian]

Every mall owner in North America has visions (and probably architectural drawings) for "repurposing" their properties as everything from giant entertainment halls full of video games and restaurants to offices and residences. They all understand that only the best, usually most exclusive (or, at the other extreme, discount) malls will ultimately survive as mostly retail shopping venues.

This is really nothing new--the phenomenon is at least several years old now and was heralded by malls like San Jose's Santana Row, now 18 years old, that were originally build as mixed use properties:


https://www.mercurynews.com/2020/06/...s-retail-jobs/

[Pedestrian]

Originally Posted by DCReid

In Alexandria VA, Howard Hughes owns the Landmark Mall and every store has closed except for Sears. They have talked about re=developing it to multi-use since the early 2010's but nothing has happened. This is surprising given how strong the DC retail and housing markets have been in recent years. I wonder if Sears is causing the delay - I heard they own the land and building of their stores even in malls.

Could very well be. The story of Sears is a nightmare for investors. Sears and KMart were purchased decades ago now by hedge fund guy Edward Lampert who, from the beginning, didn't really plan on running a retail empire but rather on "monetizing" the value of the real estate under stores and otherwise looting the companies. But his plans have now been interrupted several times by financial collapses and recessions (especially 2008/9 and now) as well as by his inability to run the businesses profitably pending lucrative sales of the properties. There remains debate about how well Lampert himself has done because he became not only CEO of the companies but a creditor to them and he may have sucked a profitable amount of cash out of them while running them into the ground and doing very well for himself.

How Sears Was Gutted By Its Own CEO

[PhillyRising]

The Exton Mall here where I live is already heading this way. A Whole Foods opened last year and a huge apartment building is almost complete and another is being considered where the old Sears Automotive stands. Half of the mall on the inside is vacant and the Macy's anchoring the middle of it has to be on it's last legs. It's really run down inside that store. The Sears is gone and the JC Penny's was turned into a entertainment venue. One part of the mall was taken over by the Main Line Health System for medical offices.

Malls being a mixed bag only makes sense....living, shopping and dining all together is still a very attractive lifestyle.