As the pandemic hastens the retail apocalypse, some developers are betting that empty malls can mix housing with stores and community space.
June 30, 2020, 6:00 AM CDT
It’s definitely, finally, without a doubt, the end of malls, right?
The multiple crises impacting the U.S. economy — the botched response to the coronavirus and the resulting economic fallout, and lack of spending power — have delivered a new gut punch to brick-and-mortar retail, a sector that was already reeling. More than half of all U.S. department stores in malls will be gone by 2021, one real estate research firm predicts, and surviving retailers may not be far behind; once-mighty brands such as Cheesecake Factory and the Gap are skipping rent payments, Starbucks is closing physical locations, and developers see a future for big box stores as office complexes. Banks fear “a stampede” of landlords looking to restructure loans after commercial tenants miss their rents. Last week, the Trump administration floated the idea of turning the glut of empty retail space into affordable housing.
At the Alderwood Mall in Lynnwood, a suburb north of Seattle, an adaptive reuse project already in progress suggests that America’s vast stock of fading shopping infrastructure could indeed get a second life as places to live. Such transformation could even bring malls closer to the “village square” concept they were initially envisioned to become.
Developers are turning a wide swath of the 41-year-old shopping center into Avalon Alderwood Place, a 300-unit apartment complex with underground parking. The project won’t completely erase the shopping side of the development: Commercial tenants will still take up 90,000 square feet of retail. But when the new Alderwood reopens, which developers expect will happen by 2022, the focus will have shifted dramatically. One of the mall’s anchor department stores, Sears, shut down last year; in a sense, the apartment complex will be the new anchor.