Ideas for Repurposing Vacant Retail Malls
Experts say that the coronavirus pandemic has accelerated trends that were already taking place in the real estate industry. The retail market was already facing challenges from e-commerce before COVID-19, and the phenomenal increase in online shopping due to COVID-19 has further stressed the sector, causing a wave of store closings. According to a recent report by the National Association of REALTORS®, 9,350 stores were closed in 2019, and another 2,021 have been shuttered as of April 2020. But what’s to come of the vacant malls left behind?
These malls contribute to urban decay and reduce property values. But adaptive reuse of these vacant properties allows them to be repurposed. Here’s what NAR discovered when it looked into new uses for vacant malls, conducting both a survey and additional research.
- The most common new use for vacant malls was for new retail – new stores to replace those that closed, popups or new anchor tenants. Mixed use and warehouse space were the other top choices for new uses.
- On average, vacant malls sold at a discount of 43%, with an average price per square foot of $80.
- How were these deals financed? Major sources of financing included retail REITs, private investors, local banks and regional commercial banks.
One example of the successful adaptive reuse of a vacant mall is Westside Pavilion, a 756,236-square-foot mall in West Los Angeles that closed in 2019. The property is being converted into One Westside, a state-of-the-art, 584,000-square-foot creative office campus that leaves existing dining and theater space unaltered. Completion is slated for 2022, and the property is already leased – to Google as the sole tenant.
For more information, use the contact information below. New Report Reveals Massive Shifts in Tenant Behaviors
A recent study by Zumper, an online rental marketplace, reveals massive shifts in renter behavior and historic market changes for renting in 2020.
The company’s “State of the American Renter” report for 2020 was based on surveys of more than 14,000 Americans conducted between June 2020 and August 2020. It demonstrates how the coronavirus pandemic is altering renter behavior and reversing rental market trends. Key findings include:
- Renters are moving back in with mom and dad. Nearly 50% more renters are moving back in with their parents, with Millennials moving most often.
- The majority of renters are under financial stress, with tenant unemployment at 12.7%.
- Renters are moving more than ever before. A quarter reported moving to a new city within the past year, up 33% from 2019.
- Renters are abandoning expensive cities in favor of cheaper, often neighboring, markets. For example, Bay Area residents are moving to Sacramento.
- The country’s priciest cities are seeing the sharpest rent declines. The median rents in San Francisco, New York, Boston, Oakland, San Jose, Washington, D.C., Los Angeles and Seattle declined 15% from the start of 2020.
To review the complete report, click here or use the contact information below. NAIOP Office Space Forecast
A new office space demand forecast by the NAIOP Research Foundation projects a period of negative absorption through late 2020 and early 2021. The good news: Total net absorption from Q2 2021 to Q3 2022 will exceed negative absorption from the recession, resulting in overall gains.