Sand Hill Property Company
Is there anything more distinctly American than spending an afternoon in a sprawling suburban mall? Ah, the memories. Fighting fellow consumers for the last marked-down summer blouse at J.C. Penney. Dodging hordes of loitering/cruising teens and tweens. Justifying the intake of a 1,080-calorie Cinnabon Caramel Pecanbon because you’ve been “walking for miles and miles.”
Just as the incursion of Levittown-style suburban developments helped define the U.S. in the years after World War II, so too did the invasion of the massive, enclosed mall in the ’70s, ’80s, and ’90s.
But now this somewhat beloved and utterly iconic American institution—forever immortalized by teen classics like “Fast Times at Ridgemont High,” “Mallrats,” and “Clueless”—is in danger of becoming an endangered species. The primary culprit: digital technology. Just as the internet relegated the compact disc, snail mail, travel agents, and daily newspapers (sniff) to the dustbin of history, it’s also having a devastating impact on brick-and-mortar retailers. More and more shoppers are deciding to skip the traffic, ditch the lines, take a pass on Black Friday mob scenes, and do it all online instead.
The sea change has already begun. Foot traffic in most of the nation’s largest malls is dropping. Mall mainstays like Aeropostale, Wet Seal, and Pacific Sunwear of California have filed for bankruptcy. And more and more enclosed shopping centers, once vibrant hubs of their communities, have gone entirely dark.
That leaves these towns and small cities in a pickle: What do they do with these empty, hulking 600,000- to 1.2 million-square-foot shrines to consumer culture? What will happen to the property values in towns once defined by their malls?
How is the decline of the mall going to affect American life itself?
Some municipalities are finding that these dead shopping meccas present a unique opportunity to reinvent—and reinvigorate—their sleepy suburban landscapes. The centers are being transformed into public parks, medical complexes, even hockey rinks. In some cases they’re even being rethought as walkable “urban developments in the suburbs” which include funky boutiques, innovative restaurants, fitness centers, entertainment, and, yes, housing.
“[Stores are] closing. The department store business is shrinking dramatically, and that’s the heart and soul of a mall,” says Howard Davidowitz, chairman of Davidowitz & Associates, a retail consulting and investment banking firm based in New York. “Malls are going to close, and there’s simply going to be lots of different things to be done with the land.”
Malls by the numberswxin/iStock
Enclosed malls, the deluxe, supersize counterpart to strip malls and open-air bazaars, began popping up in the postwar era. The first modern regional, indoor mall, the Southdale Center, was constructed in 1956 in the Minneapolis suburb of Edina, MN.
It’s fitting that the center, still in operation, is just six miles from the Mall of America, the country’s largest enclosed mall—a ginormous pseudo-city with more than 520 shops, 50 restaurants, and a Nickelodeon theme park.
In 1970, there were 306 enclosed malls across the country, according to the International Council of Shopping Centers, a trade group. That steadily rose to 555 in 1976; 863 in 1986; and 1,040 in 1996.
Cliff Lipson/CBS via Getty Image
The pace of new construction continued into the early aughts, but then hit a wall. About 200 malls have closed down in just the past two years, says Ellen Dunham-Jones, an architecture and urban design professor at the Georgia Institute of Technology, in Atlanta. That leaves about 1,100 enclosed malls left in the country, according to her records.
And the overall number of mall shoppers has dropped 4% to 4.5% annually in each of the past three years, says retail consultant Jan Rogers Kniffen.
Why you may want to live in a mallClearly, something had to change. And in many cases, that’s the malls themselves.
There are now nearly 300 former malls in the U.S. that either have or are becoming mixed-use developments, says Dunham-Jones. And about 50 of these conversions include housing.
Living in an apartment or condo in one of these retrofitted malls, where residents can easily walk to shops, movie theaters, and often even their doctors’ offices, is appealing, the theory goes, for suburbanites who want a taste of city living.
The Big Sell: It allows folks to have the best of both worlds. They can stay close to their families, friends, and jobs while forking over less each month for their mortgage and rent payments than they would in a major metropolis. It can be an appealing existence for millennials in search of entertainment as well as empty nesters looking to downsize.
“A lot of people want to live in a more urban lifestyle, but for many reasons they want to stay in suburbia,” Dunham-Jones says.
These sprawling, empty shopping centers are also appealing to developers. At 50 to 100 acres (when factoring in those massive parking lots), they’re the size of many planned communities and subdivisions, and they’re usually located near existing residential neighborhoods. And at a time when land is becoming ever more scarce, and therefore ever more expensive, bargains still abound.
“The dead malls and the dead parking lots are the new cheap land,” Dunham-Jones says. “A lot of developers are finding land that’s already been cleared. It’s flat; it’s already got some infrastructure on it [such as utility lines].”
Can these redesigned malls revitalize communities?Arcade Providence
It’s true that not every suburban mall is suffering. High-end shopping meccas “are doing gangbusters,” because they provide the sort of luxury experiences shoppers can’t get online, says Dunham-Jones. More and more are stepping up to offer perks like valet parking and chic boutiques with fitting rooms that can take photos of shoppers from different angles (all the better to see exactly how that LBD looks from all angles).
It’s typically the older, smaller malls without the top-notch stores that are struggling, she says. Many predate the construction of modern highways and are in out-of-the-way locales.
These older meccas are the sorts of eyesores that are ripe for redevelopment. And when done well, they can actually help to revitalize their surrounding neighborhoods.
Take the Boca Mall in downtown Boca Raton, FL. It opened in 1973, but was razed in 1989 due to bad management, frequently flooded parking lots, and a poor selection of stores, according to the Palm Beach Post.
Just two years later, it reopened as Mizner Park: a 30-acre project complete with shops, restaurants, office space, and nearly 300 housing units—as well as a promenade. The project was widely credited with bringing the city’s downtown back to life.
Property values increased about 14 times in the dozen years after its opening, according to the Post story from 2011.
This isn’t an isolated example. The nation’s first urban shopping mall, in downtown Providence, RI, underwent a similar transformation—which also helped rejuvenate the surrounding community.
In 2013, the Arcade Providence, built in 1828, was turned into 48 affordable microapartments on the second and third floors, and 17 unique boutiques (no chains allowed) were installed on the ground floor.
“It was just trying to make this building economically viable again,” property manager Wilson Saville says of the conversion. “Some of the shop owners who work on the first floor of the building live upstairs as well.”
The apartments range from 225 to 800 square feet, and rents vary between $850 to $1,500 a month.
Median home prices near the arcade jumped nearly 39.3% in 2013, the year it opened, according to the Rhode Island Association of Realtors® & State-Wide MLS. They have since fallen, but were still up nearly 13.9% in 2015 compared with 2012.
“It’s revitalized the whole downtown area, because it’s brought shops and people living there,” says local Realtor® Sam Glicksman of William Raveis Realty. “Prices have gone up because demand has gone up. … A lot more people want to live downtown [now].”
A dead Silicon Valley mall may get new life with the world’s largest green roofSand Hill Property Company
Another big mall transformation is planned for Silicon Valley—if Cupertino voters approve the $3 billion, privately funded plan come November. The Hills at Vallco would turn the 58-acre, mostly vacant Vallco Shopping Mall, built in the 1970s, into a complex packed with entertainment venues (including an ice skating rink and bowling alley), restaurants, shops, office space, a community center—and 800 apartments.
About 160 units would be set aside for seniors while additional units would be offered at prices below market rate.
Oh, and there’s the 30-acre green roof, touted as the largest in the world. It would include nearly 4 miles of public trails and paths, as wells as vineyards and a rooftop wine bar.
“At one time it was a fully thriving mall, but it hasn’t been for the last 10 years or more,” says Anjali Kausar, CEO of the Cupertino Chamber Commerce and a supporter of the redevelopment. “Life needs to go into it.”
The housing is desperately needed in the area, she says, as the lack of it has pushed median list prices up to a mind-boggling $1.6 million, according to realtor.com®.
She hopes these units, as well as the new dining and entertainment options, will entice the many millennials who work in Silicon Valley but live in San Francisco to move to the area. The project would conveniently be located near the new Apple campus.
Sand Hill Property Company
Should all malls be reimagined?Not every struggling mall is located in a wealthy area. In fact, most of those that have fallen on hard times are in economically depressed areas, including the Rust Belt, where “there’s not a lot of middle class to support them,” says Dunham-Jones. Without residents who can afford the rents and support the shops and restaurants, these developments can’t succeed.
In those cases, the shopping centers are better off torn down and turned into things like parks, she says. That can help boost property values over time.
“Every community that has a dead mall wants redevelopment,” says Dunham-Jones. “[But] it’s not a given that every single mall can be reimagined. … Redevelopment will only work in a strong market.”
The post Will the Death of Malls Save the Suburbs? appeared first on Real Estate News and Advice - realtor.com.
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