How to Repurpose Closed Mall Space
If you are heading to your local mall this holiday season, you might notice some changes. With retailers struggling to keep up with online sales, the landscape of the modern American mall is changing. The once sprawling commercial centers are struggling. Scott Crowe, chief investment strategist with CenterSquare Investment Management, told MarketWatch, “over 44% of current mall retail space will be either shuttered or repurposed over the next 5-7 years.”
The housing market is facing rapid home price appreciation due to inventory shortage, and so is the rental market. The steady construction of multi-family housing since the Financial Crisis has left the higher-end rental market with an over-supply of apartments, leaving the middle-to-lower income market hurting. By converting unused mall-space into housing units, developers can replenish the rental market and simultaneously make use of the space.
In South Los Angeles, investors at Capri Capital Partners bought the Baldwin Hills Crenshaw Plaza mall to convert the space into 961 units of mixed-income housing plus office space, hotel rooms, and even some retail stores. To facilitate transportation, Capri also donated land to the LA Metro system. Elsewhere in Southern California, the San Diego Westfield UTC will be expanded to include 300 apartments. Across the country in Milwaukee, after sitting vacant for six years, the Prospect Mall was converted to the Overlook on Prospect and now offers one-to-two-bedroom apartment units ranging from $1350-$1750 each month. As a result of this success, a second revitalization project is planned for the Grand Avenue Mall in downtown Milwaukee.
The mall redevelopment opportunity creates a possible solution to inventory constraints and home price appreciation. CoreLogic chief economist Sam Khater speaks favorably about mall-apartment conversions, explaining, “there’s plenty of supply on the high end. But we need housing all across the income spectrum.”