Malls Are Being Reborn As Next-Gen Mixed-Use Properties

At this point, the U.S. housing crisis is well documented. The nation is short some 6.5 million homes, and developers can’t seem to build fast enough to meet the demand. Experts expected rising interest rates to exacerbate the housing shortage by stalling development activity and further throwing off the housing supply-demand pendulum—but in May, there was some good news. U.S. homebuilding surged, rising 22% despite expectations that new construction activity would decrease. As it turns out, the low levels of housing supply increased builder confidence enough to offset economic concerns and rising costs. According to the National Association of Home Builders/Wells Fargo Housing Market Index, builder confidence is increasing for the first time in a year.

The confidence is helping to accelerate alternative opportunities for home building, and obsolete shopping malls have shot to the top of the list. While residential is in short supply, shopping malls are suffering from a problem of abundance. People don’t use or need as much physical retail space as they did in the past. Because retail has historically followed rooftops, most malls are already in dense population centers—the exact places most in need of housing. The dynamic is pushing developers to repurpose mall sites into mixed-use projects that can supply both the housing and retail that communities need to thrive. The new surge in housing construction has started to increase bids for mall redevelopment sites across the country.