The retail apocalypse has been raging for years now. Thanks to the ease and cost effectiveness of e-commerce, the appeal of maintaining physical storefronts has slowly but surely waned over time. And thanks to the devastating impact of COVID-19, there's been an uptick in store closures, or planned closures, in 2020 -- notably among department stores.
All of this clearly spells trouble for malls. An influx of vacancies could make the cost of maintaining malls unsustainable. But if that's the case, it may be time for malls to get more creative with regard to how otherwise empty space could be utilized. Here are a few options mall developers and investors might consider.
1. Office/coworking spaces
Coworking space jumped in popularity before the COVID-19 pandemic, and after months of being cooped up at home, self-employed and remote workers without an office to return to may be eager to take matters into their own hands. In the near term, there may be a huge surge in coworking space demand, so malls could explore the idea of converting vacant stores -- especially larger spaces, like those reserved for department stores -- into functional office setups.
2. Medical offices
The demand for medical care will always exist, and as urgent care and walk-in centers become more popular, there's a real opportunity for malls to capitalize on this trend. Whether it involves converting one or two empty stores into clinics or converting entire malls into massive medical complexes, pivoting in this direction could be just the thing that salvages mall space.
3. Residential units
Many cities lack affordable housing in a very big way. Malls struggling with vacancies could therefore look at switching gears by converting to residential units. This can actually be achieved in a couple of ways -- either by becoming completely residential, or by dedicating one side of a mall to apartments and another side to retailers and commercial tenants.
Of course, there are zoning-law implications that would need to be sorted out to make this sort of arrangement feasible. There will also be costs involved. Malls aren't designed to look like apartment buildings, and converting that space will require an added investment -- but it could still be very worth exploring. Another thing to keep in mind is that malls tend to be centrally located -- namely, adjacent to main roads and, in some areas, public transportation. All of this makes malls the ideal locale for new housing units.
While malls may not be in danger of dying out immediately, the massive number of store closings, or planned closings, we've seen this year already is an indication that they'll probably be in trouble in the not-so-distant future. Investors and developers will really need to be open to different ideas to maximize that existing space. The above suggestions are just a few options that may be viable as physical retailers increasingly become less commonplace.