Municipalities are now buying into big mall redevelopments
Growing numbers of malls are struggling for turnaround opportunities. Whether by adding new uses, reconfiguring existing spaces, or executing a 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).
Project and place
To connect, redevelopment pitches must acknowledge and accommodate core commercial and community realities. Strong redevelopment pitches will address these realities, illustrating the untapped potential in the site and presenting a compelling strategic plan to realize that potential. Because redevelopment timelines can vary greatly based on lease structures and financial performance, the best operators in this space are flexible. They can move quickly when needed, but are adept at playing the long game and finding the right opportunities to proceed with a redevelopment at the right time.
Collaboration and clarity
Redevelopment plans are based on a vision for the highest and best use of space—within the constraints of what local stakeholders will commit to: a fundamentally collaborative enterprise. Honesty, clarity and collaboration are critically important elements in successful redevelopment pitches. It’s important to approach municipal decision-makers and community stakeholders ASAP. The best redevelopment plans are realistic and achievable while also calibrated to fit the site, community needs, and municipal parameters regarding variances and infrastructure updates. It’s about aligning the redevelopment vision to get all parties involved feeling both comfortable and inspired about the project’s long-term potential.
The recipe
In addition to the sensitivity to context, community, clarity, and creativity outlined above, most effective mall redevelopment pitches today feature each of the following key elements:
Less is more. The redevelopment strategy for a 500,000-sq.-ft. mall might cut that retail square footage by half. This can be addition by subtraction, however. When repositioned and complemented by new tenants, new design elements, and new uses, retail sales could easily exceed existing numbers.
Accommodate existing anchors. Flexibility with and buy-in from existing anchors is at least as important as enthusiasm from community stakeholders. The best redevelopment strategies plan ahead and leverage, accommodate, or relocate existing anchors.
The power of placemaking. Compelling redevelopment visions create a true community asset that goes beyond retail sales to become a multifaceted social and economic centerpiece. Integrating new F&B, residential, hospitality, and other mixed-use elements—often in a newly open outdoor layout—can transform an enclosed mall into a vibrant space that feels simultaneously like an exciting destination and a natural extension of the surrounding community. It’s perhaps the single most common ingredient in today’s recipe for redevelopment success.
Josh Poag is President and CEO of Memphis-based Poag Development Group, a leading mixed-use real estate developer. He can be reached at [email protected].