Municipalities are now buying into big mall redevelopments

August 02, 2023

August 2, 2023

Chain Store Age
By: Josh Poag

Growing numbers of malls are struggling for turnaround opportunities. Whether by adding new uses, reconfiguring existing spaces, or executing comprehensive teardowns, developers in this specialized commercial real estate niche have a keen understanding of how to transform faltering malls into dynamic destinations.

But even the best and most innovative acquisition and redevelopment plans need support from municipalities. Developers are getting more sophisticated at pitching their vision to secure that support. Here’s how (and why) those pitches have changed in recent years, and why they are resonating;

Changing times—vision and value

The pitch and strategy development process for enclosed malls has changed substantially in recent years. Prior to the pandemic, many owners and communities overvalued their local malls, reluctant to give up formerly formidable financial and social resources, viewed as iconic features on the local retail landscape. They were essentially betting on a turnaround of a slowly deteriorating asset class.

When COVID hit, the deterioration accelerated for many of these malls. The communities could no longer deny that many of these malls needed to be rethought, and a new vision needed to be developed.

Today, communities are noticeably more open to placemaking. Pandemic-driven sales decreases in the malls and continued strong performance from lifestyle centers and mixed-use concepts seem to have contributed to a fundamental perspective shift. There’s more format flexibility and appetite for outdoor spaces, and redevelopment pitches that feature lifestyle center placemaking are getting a warm reception (and access to capital).