Conversion of Shopping Malls: Transforming Retail into Residential Spaces

conversion of shopping malls - The Home Atlas

The conversion of shopping malls into housing developments is reshaping the American urban landscape. As traditional anchor department stores like Macy’s and JCPenney decline, developers are reimagining malls not just as retail hubs but as mixed-use spaces where people can live, work, and socialize. With a housing crisis gripping the nation, this innovative reuse of mall space addresses two critical needs: reviving struggling retail centers and expanding housing availability.

Rendering of the redeveloped FlatIron CrossingSource: Macerich — Rendering of the redeveloped FlatIron Crossing
Source: Macerich

The Rise of Mixed-Use Developments

Once bustling centers of commerce, many malls are now marked by high vacancy rates and dwindling foot traffic. According to a CNBC report, nearly 34 million square feet of U.S. mall space remain vacant. This surplus of underutilized land presents an opportunity for developers to construct housing while preserving the retail and restaurant spaces that continue to draw customers.

For instance, the FlatIron Crossing Mall in Colorado is undergoing a significant transformation, adding residential units alongside retail spaces. Jacob Knudsen, vice president of development for Macerich, highlights how this trend is making malls “cool again” by integrating lifestyle amenities such as dining, green spaces, and recreational areas.

Addressing the Housing Crisis

With a national housing deficit of 4.5 million homes, the conversion of shopping malls offers a practical solution. As of January 2022, at least 192 U.S. malls planned housing developments, and 33 had completed projects, according to Realogic. States like California, Florida, and Texas are at the forefront, with dozens of new projects underway.

These developments are not one-size-fits-all. In some cases, entire department stores are demolished to make way for modern apartments with better access to natural light and ventilation. Other projects, such as The Arcade in Providence, Rhode Island, repurpose existing structures. The Arcade, once the oldest indoor shopping mall in the U.S., now features micro-apartments and a mix of retail and dining options, illustrating the creative possibilities of adaptive reuse.

Challenges in Mall-to-Housing Conversions

Despite the potential benefits, converting malls into housing is not without hurdles. Developers must navigate complex zoning laws and outdated lease agreements, as shopping centers were traditionally designed for retail use. The physical layout of malls and department stores often necessitates extensive renovations or complete teardowns.

Oscar Parra of Pacific Retail Capital Partners emphasizes that success often requires creating a buffer between residential units and retail spaces. For example, at the former Carson’s department store near Chicago, apartments are being constructed adjacent to, but not directly within, the retail complex.

A New Lifestyle: Living at the Mall

Living in a mall may sound unconventional, but early adopters highlight the unique benefits. Residents enjoy easy access to shopping, dining, and entertainment without leaving their buildings—a convenience particularly appreciated in extreme weather. At Milwaukee’s Grand Avenue Mall, tenants have access to amenities such as a gym, dog-friendly spaces, and a modern food court.

This integration of residential and retail spaces enhances the mall experience, transforming it into a self-sustaining community. Developers like Pacific Retail envision a future where living at the mall is as seamless as vacationing at a resort, with centralized systems for shopping, dining, and services.

The conversion of shopping malls represents a forward-thinking approach to urban planning, addressing both the housing crisis and the decline of traditional retail spaces. As developers reimagine these spaces, they are creating vibrant, mixed-use communities that breathe new life into once-struggling malls. This innovative trend, as highlighted in a CNBC report, may well define the next chapter in the evolution of American cities.