5 Key Considerations in Retail Repurposing Projects

As the COVID-19 pandemic keeps winding down, the United States economy’s retail sector continues to recover from 2020’s market crash. Because of mass lockdowns and business closures, brick-and-mortar retail stores suffered great financial losses during this period. Small family-owned retail stores and large chain stores alike were affected.

The eCommerce sector also contributed to the retail industry’s decline. During the pandemic, bored homebound consumers ramped up their online shopping practices. This only accelerated a trend that had been building for several years.

Large retail centers were not immune to the pandemic-era business upheaval. Some retail tenants (including large department stores) simply stopped paying rent while they were closed. Many cash-strapped retail stores were forced to shut down for good. As a result, mall owners and landlords experienced a drastic decrease in revenue.

Fast forward to 2022, and retail malls have become a hot commodity. Shopping is not necessarily the reason for this notable development. Building owners, developers, and/or investors are seeking to repurpose these vacant (and often run-down) properties.

Specifically, the parties want to transform each mall’s buildings into mixed-use venues. Ideally, the repurposed buildings will sync more closely with consumers’ evolving preferences.

Our firm has worked with several clients undertaking retail repurposing projects. Each venture has distinctive opportunities and challenges. Every project requires us to cast aside our preconceptions and approach each project with creativity and an open mind.

Transforming retail malls (and other retail centers) into mixed-use settings has three defined benefits. This holds true regardless of the facility’s size or location.

The United States’ building industry comprises almost half of the country’s aggregate energy use. Repurposing existing buildings (including retail centers) helps to reduce the overall carbon emissions involved in new construction. The retail centers’ relatively low heights can also help to generate energy savings.

In addition to carbon reductions and energy savings, repurposing buildings can facilitate significant cost savings. Specifically, less building construction means developers will realize financial savings from less-expensive renovations. In addition, avoiding new construction means a reduction in landfill waste, resulting in further cash retention.

In many suburbs, repurposed malls may become adaptable workspaces closer to commuters’ homes. Some of these retail centers are good candidates for transformation into town centers. These venues can help anchor the area, offering civic and/or cultural features that the area may lack. In contrast, repurposed urban-area retail centers may include restored historic buildings that take on new roles.

By all accounts, the pandemic led to a wholesale reshuffling of priorities. For example, locked-down consumers had plenty of time to think about what was important to them. During the pandemic, they became accustomed to eCommerce purchases’ convenience and near-immediate gratification. They now see little reason to return to traditional malls or retail centers.

As a result, retail center owners and developers have had to embrace a new paradigm that envisions their venues in a new way. Simply put, they need to repackage their facilities to accommodate consumers’ changing tastes. These three important factors should be top-of-mind when making that decision.

Today’s consumers are embracing healthy and enjoyable experiences, cultural interactions, and open spaces. Expansive anchor department stores have no place in this design scheme. Therefore, retail center owners and developers should consider new anchors focused on healthy lifestyles and community experiences.

Examples include wellness and specialty fitness centers. Higher-end dining choices, ethnic restaurants, and entertainment venues are other good options. Spacious outdoor areas are ideal for walking trails and/or community events.

Existing retail centers are a blank slate for the creation of mixed-use facilities. Typically, the centers are located in suburban areas adjacent to large residential populations. Mixed-use venues might contain medical offices, day spas, coworking spaces, and assisted living facilities, among other businesses.

New and repurposed developments often include spacious landscaped areas that invite healthy outdoor activities. Racquet courts, circuit training courses, and an outdoor yoga area may be good options. Scenic picnic spots, and a rotation of health food or ethnic-themed food trucks, would be added enhancements.

When retail centers are repurposed into mixed-use settings, the redeveloped venues often attract individuals of varied ages and cultures. Collectively, these groups can help to facilitate a vibrant, sustainable destination. In time, the revamped facilities will help to add a rich new dimension to the surrounding community.

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