Insights from RECon 2019: How to Revive Underperforming Retail Properties
A common theme I heard at ICSC RECon this year was:” We’re repurposing our strip centers, malls and large outlets.” What surprised me was how many different ideas there were among retail property owners on what they would do with underperforming retail properties. Although surprised by some of the ideas, I found them to be great plans to revive the properties.
With many retailers closing stores and an even larger push for e-commerce sales, what’s going to happen with all those outdated large strip centers and malls? Well rest-assured, there are plenty of ideas out there on how to revive them. There also seems to be capital out there to make these ideas come to life.
The most common repurposing ideas were:
- Medical office space for urgent care and dialysis centers
- Entertainment hubs
- Mall conversions to lifestyle centers
- Mall conversions to office space and call centers
- Redeveloping into multi-family units
Medical office space for urgent care and dialysis centers seemed to be a big one. In fact, if you look around your town, you’ll likely see these popping up everywhere. With the rising cost of healthcare, more individuals are looking for ways to stretch their dollar and have opted to go to urgent care centers rather than a physician or emergency care center. Dialysis centers were also brought up often, and again, something I’m seeing pop-up more and more.
Entertainment hubs were the next big idea. These spaces are a perfect fit for family fun centers, trampoline parks, arcades, indoor mini-golf and more. Big box retail centers such as vacated hardware stores, grocery stores, etc. meet the requirements needed to make these a success. High ceiling heights, large square footage and parking lots are key on these redevelopments.
The next two ideas were targeted toward mall deconversions. Changing these massive spaces into something they were never meant for. Lifestyle centers were brought up a few times throughout the convention. I found it interesting that the idea to redevelop these spaces included upscale restaurants, multi-family apartment or condo towers, movie theaters, rock climbing, grocery stores, etc. I’ve seen this become a popular thing for new development. I think it’s a great idea to revive some of these massive properties that are underutilized.
Lastly, I heard the idea of deconverting malls and turning them into office space and call centers. With many of these properties battling deferred maintenance, rising vacancy and tough competition from newer built properties, the cost to buy the properties can be pennies on the dollar and can likely justify the high cost of conversion.
Even with the changing landscape of the retail environment, there seems to be plenty of great ideas and opportunities to repurpose these spaces. If you’re wondering what to do from an insurance standpoint with properties facing vacancy, keep an eye out for part two of this blog.
In the meantime, for any questions regarding the conference or real estate insurance, contact the ‘A’ Team.
- Vacant Properties- Know the Risks
- How to Handle Vacant Space During Tenant Transitions
- 3 Tips for Protecting Vacant Property
- Property Valuation: Cost Approach Method
- Real Estate E-Book
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