America’s housing shortage has become so severe that politicians are looking left, right, down and downtown to see what we could turn into housing. Nearly a decade of underbuilding has created a shortage of 3 million to 6 million housing units, leading young Americans to double down with roommates or family or delay buying a home altogether.
However, there is a widespread and underutilized class of real estate that could potentially impact this figure. The long-suffering retail industry—malls, malls, dead malls and their cousins—can be transformed into hundreds of thousands of new apartments across the country with just a little effort.
Converting just 10% of underperforming retail properties into housing could lead to the creation of 700,000 new apartments nationwide, according to a November report from the company. Corporate community partners. Although it’s just a drop in the bucket America’s multimillion-dollar housing shortage, this could make a real difference for some communities. In the Boston area, a 2021 forecast predicts that just 10% of mall conversions would be enough to absorb all of the region’s population growth over the next decade. study from the Massachusetts City Planning Council. (To be a good candidate for new housing, a property does not have to be completely empty, and many of the housing conversions in this study propose preserving retail space on the ground floors of apartment buildings.)
“I think it has enormous potential in the U.S.,” said June Williamson, an architecture professor at the City College of New York and co-author of several books on building reuse. Luck.
“All of the land already developed for retail use and scattered at very low densities across the United States has the capacity to accommodate a wide variety of housing types,” she added.
Of course, the possibility of radical change does not mean it will happen, and converting retail into housing poses a number of physical and political challenges. However, there are key reasons why converting dead retail is a much more promising solution to the housing crisis than office-in-apartment projects, which have proven to be far more expensive and rarer than originally thought. And there are key reasons why right now this is still only potentially happening and not actually happening.
Retail everywhere
Decades of sprawl-oriented development have led to an oversupply of retail space in the United States. According to the data, there are 116,000 shopping centers in the country. ICSC (formerly the International Council of Shopping Centers). This includes not only large shopping centers, but also city center shopping centers and smaller centers such as strip malls.
“Malls are everywhere, they’re everywhere, they’re often ineffective,” said MAPC Land Use Planning Director Marc Racicot. Luck. “In many cases, they are already coming into the neighborhood.”
While not all retail is lagging, much of it is, and the economic climate means improvement is unlikely. According to the 2023 forecast, about 50,000 stores will close in the United States over the next five years. UBS report.
Already dozens of shopping centers have switched to housing. In Irondequoit, New York, a suburb of Rochester, an abandoned Sears building has been converted into 157 low-income and senior housing units called Skyview Park Apartments; the complex opened in 2022. In Santa Ana, California, a low-rise shopping center has been transformed into a community center including 55 apartments. And in Aurora, Illinois, part The Fox Valley Shopping Center was converted into 304 units.and another shopping center in Vernon Hills, Illinois, now boasts 311 units. Both projects include shared amenities and retail space, David Dowell, director of a national architecture and urban design firm. El Doradotells Luck.
“While it is too early to call ‘success,’ the diversity of applications will certainly make these luxury offerings more attractive,” says Dowell.
As of 2022, about 200 shopping centers across America were planning to add residential space, according to the agency. Orange County Register; 33 people have made these plans since the start of the pandemic.
Conversion in offices is difficult, in retail less so.
For a moment in the early post-pandemic era, offices seemed like a magic solution to the housing shortage. Remote and hybrid work has led to a glut of unused office space – approx. 1 billion square feet by the end of the decade – and some began to wonder about reusing this empty space as housing.
But the flow of office conversions has been more of a trickle. According to a July 2023 Deloitte study, only about 30 office and residential construction projects were completed annually between 2016 and 2021. At the time of the study, only 217 such conversion projects were under immediate development.
“If you look at what’s been converted since 2016 and what’s even slated for conversion through 2025, it’s only 90 million square feet,” Julie Whelan, global head of occupier research at CBRE, previously said. Luck. “The transformation that has occurred and continues to occur is really just a drop in the sea of available vacancies.”
So why aren’t developers and policymakers doing more to promote conversion projects like these? This is because they are often even more costly and labor intensive than new construction. Indeed, a February report from Goldman Sachs said office acquisition prices would need to fall nearly 50% for these projects to become “financially feasible,” given how much upfront work they require and the still high price of office space. Physical retail has also been hit by the pandemic and the resulting rise in e-commerce. However, unused retail is often easier to convert into housing than empty office buildings.
Most shopping center redevelopments, rather than eliminating retail altogether, include retail, residential and other uses in tight spaces. This fits with developers’ current push to create what they call “18-hour neighborhoods,” or live-work-play centers where residents can get the most bang for their buck. In other words, they can live in the same place (or very close to it) where they shop and work without spending extra money on travel. It’s also a good deal for other retailers who benefit from increased foot traffic in the area.
And vacant shopping centers may be better suited for these projects rather than office buildings because the infrastructure to support these mixed-use spaces already exists in shopping centers, said Kurt Volkman, associate principal at national architecture, engineering and planning firm HED. Luckas shopping centers often have existing infrastructure such as parking and access to public transport.
“These spaces now present an opportunity for redevelopment as their large floors and location at the far ends of the retail development provide flexibility for conversion into residential, entertainment or commercial space,” says Volkman. “Developers who see opportunity and transform shopping centers built for a different era into mixed-use spaces that meet today’s challenges will transform retail for a more profitable future.”
In addition, there is simply more space in retail outlets. Mall designs are often filled with vast amounts of empty concrete—one or more large, low-rise buildings surrounded by ample parking. Because of this, it could be relatively easy for a developer to simply add more buildings to a project by developing excess parking space, according to City College’s Williamson. Existing retail could be converted into medical, office or residential.
And conversions of shopping centers into residential buildings can happen much faster than new construction, “because there is already an existing structure on the land that already has at least one type of development permitted,” Dowell says.
“The developer doesn’t have to look for a building site or get permits for construction, cutting down trees and the like,” he says. “The main challenge at the time will be getting local authorities to approve the redevelopment plan.”
Not everything is smooth
However, in addition to timing issues, shopping center renovation projects also have their drawbacks. While the open floor plan of these buildings can allow for more flexible design, lighting and utilities can be an issue, depending on the property.
Because shopping centers are built with fewer windows, this problem “will have to be addressed through architectural interventions,” as living spaces must provide a certain level of window-to-floor ratio to ensure occupants receive natural light throughout the space, Dowell says.
“Residential buildings also require plumbing, electricity, heating, cooling and ventilation, as well as other infrastructure such as Wi-Fi or cable TV,” says Dowell. “While they will be in shopping centres, they will likely not be easily adapted for residential use, meaning significant upgrades and changes.”