We have all read the articles and seen the headlines: Malls Are Dying, Mall-pocalypse and other similar coverage forecasting the looming extinction the American mall. While these dire predictions might veer a little too often into hyperbole, they do describe a very real phenomenon. Malls are struggling. Online retailers have been steadily nibbling away at brick-and-mortar market share, and large department store dinosaurs have struggled to adapt to an evolving consumer marketplace.
Some malls are failing. Many more are underperforming. But malls as a category are not dying–far from it. Category A malls will continue to flourish, and many/most B malls still have great real estate fundamentals going for them: they typically occupy valuable and desirable real estate, with coveted locations frequently positioned near major transportation hubs. There is a very real opportunity to turn around an underperforming mall by redeveloping it into a new mixed-use destination.
But transforming an old or underperforming mall into a vibrant mixed-use destination isn’t easy. Retail alone might no longer be the highest and best use in the reconfigured project. There are often complex design and development challenges, as well as economic, demographic and leasing considerations that need to be accounted for. New value calculations must be applied to how the various moving parts produce success in a given project.
Here are some of the most important issues to consider:
Every mall-to-mixed-use transformation begins with a detailed market analysis, with the goal of determining what new uses and tenants will be added, based on market needs. Just because you recognize the potential value of a mixed-use environment does not relieve you of the need to be thoughtful and strategic in how to go about it. It is extraordinarily risky to simply throw something at the wall and see what sticks. A mall redevelopment often requires a significant investment, and you cannot risk getting it wrong.
In addition to localized specifics (including demographics, psychographics and a void analysis to identify potential opportunities), it’s also important to appreciate the broader development landscape in the market.
In Springdale, Ohio, just outside of Cincinnati, the Tri-County Mall is undergoing a transformation that will include repurposing one of the vacant anchor stores attached to the mall….