America’s housing shortage has become so severe that politicians are looking left, right, underfoot and downtown to see what we could possibly turn into residential buildings. Nearly a decade of underconstruction has led to a deficit of 3 million to 6 million housing unitswhich leads young Americans to live together with roommates, family or hold on on to buy a house quite.
There is, however, a prevalent and underutilized real estate category that could potentially reduce this figure. Long suffering retail– strip malls, strip malls, dead malls and their cousins – could be converted into hundreds of thousands of new apartments across the country, with just a little work.
Transforming just 10% of underperforming commercial sites into housing could create 700,000 new units nationwide, according to a November report from Corporate Community Partners. Although it’s just a drop in the bucket The multi-million housing shortage in the United States, this could make a real difference for certain communities. In the Boston area, converting just 10% of strip malls would be enough to absorb all of the region’s population growth over the next decade, according to a 2021 study. study of the Massachusetts Metropolitan Area Planning Council. (A property does not need to be entirely vacant to be a good candidate for housing addition, and many housing conversions in this study propose keeping ground-floor businesses in apartment buildings. habitation.)
“I think it has huge potential in the United States,” said June Williamson, a professor of architecture at City College of New York and co-author of several books on building reuse. Fortune.
“All land already developed for commercial use and dispersed at very low density throughout the United States has the capacity to accommodate all types of housing,” she added.
To be sure, the capacity for radical change does not mean it will happen – and converting retail to housing comes with its own set of physical and political challenges. There are, however, key reasons why converting abandoned businesses is a much more promising solution to the housing crisis than office-to-apartment projects, which have proven much more expensive and rarer than initially thought. And there are key reasons why this is still just a potential right now and not really happening.
Retail is everywhere
Decades of sprawl-driven development have left the United States with a glut of retail space. There are 116,000 shopping centers across the country, according to ICSC (formerly International Council of Shopping Centers). This includes not only large shopping centers, but also downtown shopping centers and smaller centers like strip malls.
“Malls are ubiquitous, they’re everywhere, they’re often underperforming,” said Mark Racicot, MAPC’s director of land use planning. Fortune. “In many cases, they are already integrating into the neighborhood. »
While not all retail businesses are underperforming, most are – and the economic climate makes improvement unlikely. Some 50,000 stores are expected to close in the United States over the next five years, according to a 2023 study. UBS report.
Already, dozens of shopping centers have decided to include housing. In Irondequoit, New York, a suburb of Rochester, an abandoned Sears building was transformed into 157 units of low-income and senior housing called Skyview Park Apartments; the development opened in 2022. In Santa Ana, California, a low-rise shopping center transformed into a community center that includes 55 apartments. And in Aurora, Illinois, part of the Fox Valley Mall was converted into 304 units, and another shopping center in Vernon Hills, Illinois, now has 311 units. Both developments include shared amenities and retail space, David Dowell, principal of a national architecture and urban design firm, said. Eldoradotell Fortune.
“While it’s too early to say they’ve ‘made it,’ the combination of uses will certainly make these luxury offerings more appealing,” says Dowell.
In 2022, nearly 200 shopping centers across America planned to add residential units, according to the Orange County Register; 33 people had made these plans since the start of the pandemic.
Office conversions are difficult, retail less so
For a while in the early post-pandemic period, offices seemed like the silver bullet to solving the housing shortage. Remote and hybrid working have created a massive glut of unused office space. 1 billion square feet at the turn of the decade – and some began to question the reuse of this empty space as housing.
But the flow of office conversions has been rather trickle-down. Between 2016 and 2021, only around thirty office-to-residential projects were put into service each year, according to a July 2023 study. Deloitte study. And at the time of the study, there was only 217 such conversion projects in the immediate pipeline.
“If you look at what has been converted since 2016 and what is even planned to be converted by 2025, that’s only 90 million square feet,” said Julie Whelan, global head of occupier research. at CBRE. Fortune. “The conversions that have taken place and are underway are really just a drop in the ocean compared to the vacancies.”
So why aren’t developers and politicians doing more to promote these types of conversion projects? That’s because, often, these projects are even more expensive and time-consuming than new construction. Indeed, a February report from Goldman Sachs said office acquisition prices should fall by almost 50% for these projects to be “financially feasible”, given the amount of initial work they require and the still high price of office space. Physical retail has also suffered from the pandemic and the resulting rise of e-commerce. However, unused businesses are often easier to convert into housing than empty office buildings.
Most shopping center redevelopments, rather than eliminating retail altogether, include retail, housing, and other types of uses in a limited space. That fits with developers’ current focus on creating what they call “18-hour neighborhoods,” or work, play and live hubs where residents can essentially get the most bang for their buck. In other words, they can live in the same location – or very close to – where they shop and work without spending extra money on travel. It’s also a good deal for the remaining retail stores, which benefit from increased foot traffic in the area.
And vacant mall locations may be better suited to these developments than office buildings because the infrastructure to support these mixed-use spaces already exists in malls, said Kurt Volkman, the company’s managing partner. national architecture, engineering and planning HED. Fortunebecause shopping centers often have existing infrastructure like parking and access to public transportation.
“Now, these spaces present a redevelopment opportunity because their large footprints and locations at the ends of the commercial development provide flexibility when converting to housing, entertainment spaces, or commercial spaces,” Volkman says. “Developers who see the opportunity and transform shopping centers built for another era into mixed-use spaces that meet today’s challenges will reshape retail for a more profitable future.”
In addition, points of sale simply have more space. Shopping center design is often filled with large amounts of empty concrete: one or more large, low-slung buildings surrounded by expansive parking lots. For this reason, it can be relatively easy for a developer to simply add additional buildings to a project by building on excess parking space, according to City College’s Williamson. Existing businesses can be transformed into medical services, offices or housing.
And mall-to-housing conversions have the potential to happen much more quickly than new construction “since there is already an existing built structure on land that is already permitted for at least one type of development,” Dowell says.
“The developer does not need to look for land to build on or obtain building permits, cut down trees, etc. “, he said. “The main concern will be to get the redevelopment plan approved by local authorities.”
Not everything is easy
Yet aside from timing issues, mall redevelopment projects have their own drawbacks. While the open layout of these buildings may lend itself to more flexible design, lighting and utility work may become an issue, depending on the property.
Given that shopping centers have been built with fewer windows, this “should be addressed through architectural interventions”, since residential spaces must offer a certain level of window-to-floor ratio so that occupants can benefit from natural light in their whole unit,” Dowel explains.
“Residences also need plumbing, electricity, heating, air conditioning and ventilation, as well as other types of infrastructure like WiFi or cable TV service,” says Dowel. “Even if a shopping center will have them, they are unlikely to be easily adapted for residential use, requiring significant upgrades and modifications. »
