Reimagining the Shopping Experience at U.S. Malls
Malls used to be the go-to spot for major department stores, but the convenience of online shopping led to their decline and eventual closures. To lure back consumers, some developers are revamping the retail experience by creating living, working, and play zones. This mixed-use concept combines apartment units, gyms, hotels, medical centers, offices, eateries, and retail spaces.
Ray Wimer, a professor of retail practice at Syracuse University, stated that this new approach is more than just shopping. It's about integrating entertainment venues, countless restaurants, and residential accommodations to draw in a younger demographic. According to him, only about 30% of malls are "A-level," meaning they complete more than 400 sales per square foot. These malls are doing fine, but others are looking for ways to revitalize themselves. Some have even managed to bounce back post-Covid-19.
The revamped mixed-use malls are quite different from the windowless malls that became popular in the 1970s. These modern structures maintain a blend of retail stores and dining options, but they now share space with additional amenities such as banks, blood centers, police stations, tax preparation services, and even residential spaces.
JLL, a real estate services giant, reported that approximately 46% of mall redevelopments are mixed-use. Traditionally, malls had "anchors" – large department stores like Sears and Macy's – that attracted foot traffic to help smaller businesses generate sales. Now, about 30% of mall anchor redevelopments are residential, and nearly 54% of mixed-use redevelopments include housing.
Young professionals and empty nesters are among those drawn to apartments and condos in malls. Josh Schrier, executive vice president and chief investment officer at Pennsylvania Real Estate Investment Trust, explained that this move attracts a younger crowd seeking social interaction and fun activities.
Integrating appealing retail and merchandise is essential for the mixed-use model, according to Joe Aristone, executive vice president and chief revenue officer at PREIT.
Mixed-use malls often feature apartments alongside medical facilities. For instance, Cooper University Health Care renovated a former Sears at Moorestown Mall into a three-story outpatient center, and a 375-unit apartment building is set to start construction in 2023.
Both open-air shopping centers and former department stores have also been converted into housing. AvalonBay Communities, a real estate investment trust, owns 15 communities in mixed-use districts and has an upscale apartment building called Avalon Alderwood Place in a mall in the Seattle suburb of Lynnwood.
The cost of a luxury apartment at the mall ranges from $1,860 for a studio to at least $3,885 for a three-bedroom unit, according to AvalonBay's website. Katie Bucklew, vice president of mixed-use and development at AvalonBay, noted that residents seeking walkable urban living with amenities at their doorstep made up the demographic for these communities.
Communities can benefit from reduced carbon footprints due to mixed-use developments, as pointed out by Shlomo Angel, professor of city planning at New York University.
Increased traffic congestion and community resistance tend to be the main arguments against mixed-use developments. However, developers must also consider the impact on infrastructure and surrounding land uses to ensure they can support the project. Those considering renting an apartment in a mixed-use mall should weigh the drawbacks – limited privacy, walking and parking congestion, and a lack of natural light – against the benefits of a location-rich lifestyle with amenities at their fingertips.
Developers are reconfiguring malls by incorporating Peiser's mixed-use concept, which includes residential accommodations, to attract a younger demographic. Only a minority of malls, known as "A-level" malls, are thriving, while others are seeking rejuvenation strategies. The drawbacks of living in a mixed-use mall, such as limited privacy and congestion, should be weighed against the benefits of a location-rich lifestyle with various amenities.
