Count on an influx of developers wanting to repurpose big-box anchor mall spaces, specifically former Sears stores, into apartments. This trend has especially revved up as the coronavirus lockdowns are adversely affecting mall traffic. There are ample retailers and restaurant chains that are especially attracted to the big-box apartment conversion concept, as it means there are guaranteed customers throughout all hours of the day. Retail businesses that cater to millennials, young families and empty nest seniors are especially interested in leasing space in malls with these big-box apartment conversion plans. Look for service industries, all variations of food chains, clothing retailers, gyms and entertainment tenants to situate their businesses within these new mixed-use mall redevelopments.
These conversions will be a win-win, as the mall receives an established on-site customer base and owners now have a cash-flowing use for the big-box space. Malls are frequently situated in suburban environments and the surrounding areas have become increasingly populated with the mass exodus of urbanites wishing to escape the big-city lockdowns and social unrest. The now-popular work-from-home model is also benefiting these retail tenants, as there are more opportunities for mall traffic and the preferred socially-distanced home delivery methods are easily accomplished. Keep an eye on mall big-box conversions into mixed-use spaces as a hot trend for the foreseeable future.
Thalhimer Realty Partners and the Rebkee Co. have already razed the 151,571-s.f. Former Sears at the Regency Mall in Richmond, Va., in an effort to create a 320-unit, five-story apartment complex within the space by early to mid-2022. Interest has been high from retailers since the developers began to redevelop the mall two years ago, followed by their filing a rezoning application for the mall’s future urban mixed-use plans last year. Future development plans call for an additional 930 apartment units and 125 hotel rooms, as well as 400,000 s.f. of retail and entertainment space and 200,000 s.f. of office space. The developers are currently in talks to potentially convert the two-level 45,700-s.f. Former Forever 21 space, along with potential parking lot space, into a senior living complex.
Recent tenants include the NOVA of Virginia Aquatics, which signed a 20-year lease for the 50,000-s.f. space within the former Macy’s south building and is expected to open by mid-2021. Surge Trampoline Park plans to open its 40,000-s.f. unit in the former Macy’s north building space before the end of the year, and YogaSix leased a 2,175-s.f. space last April. First Watch, the breakfast/brunch restaurant chain, signed a 10-year lease on a 3,615-s.f. Outparcel property at the mall last January. These are in addition to Jersey Mike’s Subs agreeing to be a part of the new development, housing itself next to a Foot Locker, which plans to move from its interior mall space to a unit facing the parking lot.
The Bayshore Shopping Center JV LLC (a newly-formed Cypress Equities entity partnered with AIG Global Real Estate Services) submitted plans to redevelop the Bayshore mall (previously called the Bayshore Town Center), in Glendale, Wisc., over the summer.
Plans are to repurpose the former Sears space (which was demolished back in 2017) into 316 apartments with the ultimate goal of creating a mixed-use lifestyle center. This will coincide with the retail tenants already approved to be a part of redevelopment, including Target, which will open a 128,512-s.f. two-story anchor unit in the former Boston Store space. Within the next two months, Total Wine & More will open a 25,000-s.f. space in the former Sports Authority, next to an Old Navy. ERIK’s, a Midwestern chain that sells and services outdoor-related merchandise such as bicycles, snowboards, skis, etc., will relocate its nearby Whitefish Bay store into the Bayshore location early this month. Current retailers that expanded into new storefront space this year include H&M, which reopened in a two-level 20,335-s.f. space, in addition to Foot Locker, Magical Nails and Rocky Rococo Pizza and Pasta.
Brookfield Properties LLC, in collaboration with AvalonBay Communities, is redeveloping a 178,000-s.f. Former Sears space of the regional Alderwood Mall in Lynwood, Wash., to include two six-story multifamily apartment buildings totaling 328 units, expected to be completed by 2022. The redevelopment will keep 90,000 s.f. of retail space, including 64,000 s.f. on the ground floor of the apartment buildings. Dave & Buster’s is expected to be one of the new retail tenants taking up the ground-floor space and the dining/entertainment venue hopes to open by early to mid-2021. Last month Bitty Fish Sushi, a conveyor belt-style sushi restaurant, opened a unit at the mall at the former Blue C Sushi space. In August, an Amazon 4-star unit opened. The mall hopes to continue to add additional “live/work/play” tenants that attract all demographic age groups, and the suburban site’s future mixed-use space should benefit from those escaping Seattle’s downtown district.
In July, Unibail-Rodamco-Westfield received approval from the Montgomery County Planning Board to develop 717 apartments, over three phases, by demolishing the former 233,000-s.f. Sears building and some parking lot space within the Montgomery Mall in Bethesda, Md. The plans also include 1.7 million s.f. of new retail and a 261-room hotel next to the mall. Its first phase includes construction of a 413-unit apartment building, as well as a four-level 136,000-s.f. fitness center, rumored to be a LifeTime Fitness, as well as 127,000 s.f. Of standalone retail. Phase two expects to see a 240-unit mixed-use apartment building with 27,000 s.f. of ground-floor retail, and phase three will bring a three-story retail store, potentially a 50,000-s.f. extension of the Macy’s store. The Montgomery Mall expects to see a Frank Pepe Pizzeria Napoletana and an Amazon 4-star to open by the end of the year, as well as Peking Duck to open by November and The Lego Store to open this month. In July, aided by a need for one-stop convenience preferences during the quarantine, a 7-Eleven unit opened in the mall.
As of August, an Arizona real estate company, Evergreen Devco, announced plans to purchase the 141,130-s.f. Sears within the Chapel Hills Mall in Colorado Springs, Colo., from Northwood Investors in order to develop a gated apartment complex with 300 units. Pending city approval, the apartments should be completed by the fall of 2021. The units would consist of six separate three-story buildings, each with 36 apartments, in addition to four separate two-story buildings, each with three units, plus three separate three-story buildings, each with 24 units. The mall currently has big-brand tenants such as Dillard’s, Dick’s Sporting Goods, AMC Theatres, Macy’s, Vans and an outparcel Jiffy Lube. The mall’s owner is hopeful that the potential upcoming apartment development will not only increase mall traffic, but also attract new restaurants and retailers to lease space in the property.
