Strip Center Conversions to Affordable Housing?
Facing housing shortages, state and local governments are eyeing a surprising source of hope: underutilized strip centers.
Office-to-residential conversions sometimes struggle, whether the buildings aren’t suited for residential or others who live in the area oppose the projects. Repurposing strip centers offers a viable alternative. Converting just 10% of the U.S.’s strip mall space could create 700,000 affordable homes, according to a Next City column by Enterprise senior research analyst Ahmad Abu-Khalaf.
Strip center conversions are more feasible than office conversions, as they utilize vacant land or build on existing structures instead of retrofitting entire buildings. Plus, ground-floor retail in redevelopments keeps existing businesses thriving and draws in residents.
Challenges like site selection, zoning regulations and financing exist, but California’s success with conversions like La Placita Cinco show the potential, according to Abu-Khalaf. The vacant Santa Ana, California, strip center went mixed-use, integrating existing shop spaces with 50 affordable homes, thanks to public-private collaboration and zoning changes. The model offers scalable hope for nationwide strip mall repurposing.
Read More About Residential Conversions
White House Provides Guidebook for Commercial to Residential Conversions
Densifying with Residential? Consider Co-Living or Co-Housing
Federal Is Banking Residential Entitlements
Mammoth Mall Makeovers Answer the Housing Crisis
Luxury Brands: Out of Department Stores and into Malls
Top malls can benefit from luxury brands’ increasing desire to move out of department stores and into their own shops. Costa Mesa, California’s South Coast Plaza is set to welcome more than 30 luxury boutiques this year. Bvlgari, Cartier, Chloe, Gucci, Lanvin and Palm Angels are opening at the posh property during the year’s first half. Alaia, apparel brand Amiri, Armani/Caffe, Baccarat, Courreges, Dior Men, Eileen Fisher, Wolford, eyewear specialist Jacques Marie Mage, jeweler Mejuri, fragrance retailer Santa Maria Novella and menswear brand Zegna are among the upscale brands opening at the mall in the second half. Luxury consumers crave increasingly curated experiences, according to JLL. Such boutiques occupy an increasing portion of high-end brands’ real estate compared with department store presences and large flagships. These curated shops made up 12% of new luxury leases in 2023, JLL reported.
Giorgio Armani opened a 5,400-square-foot shop in Costa Mesa, California’s South Coast Plaza last year, one of 30 luxury retailers to open there in 2023. Another 30 upscale brands will join Armani at the mall in 2024.
AI Tool Helps Design Greener Buildings
A recent Commerce + Communities Today forecast is proving prescient: Sustainability will take center stage in design conversations, thanks in part to innovative artificial intelligence tools. Architects and engineers are embracing new metrics and technologies to slash carbon emissions and improve building performance, MG2 principal Mark Taylor told C+CT.
Now, tech firm Poliark has launched Kend, a 3D modeling tool that calculates potential carbon emissions of buildings in real-time during the design phase. It leverages location data and material use to project carbon footprints. Architects and project teams can use the results to identify design changes that minimize carbon impact, such as substituting materials or choosing more-energy-efficient systems. The tool also claims to allow developers to stay ahead of evolving sustainability standards and to demonstrate regulatory compliance.
Consumers Defied Fears of Recession in December
U.S. shoppers shrugged off inflation and interest rate worries in December, sending retail and food services sales climbing 0.6% from November to December, the biggest such rise in three months and a sign of resilience against recession fears. Sales accelerated by 5.6% year over year, the biggest such increase in 11 months. “The figures show a very strong end to the holiday shopping season with sales at non-store retailers, clothing stores and general merchandise stores seeing the largest monthly gains,” ICSC research manager Matthew Panfel said on Thursday. “Today’s report suggests that U.S. shoppers continue to support the economy, aided by a robust labor market and in spite of elevated inflation and high interest rates.”
Changing of the Guards at Inland and Project REAP
Inland Real Estate Investment Corp. president and CEO Mitchell Sabshon will retire in February, and current Inland Private Capital president and CEO Keith Lampi will succeed him. Sabshon will maintain roles at two trusts and assist with the handover.
Meanwhile, the board of Project REAP — a nonprofit promoting diversity, equity and inclusion in the commercial real estate industry — elected Michael Kercheval chair. He’s the former executive director of the University of Colorado Boulder’s Real Estate Center, which launched REAP’s Advanced Learning program in 2022. He also is a past president and CEO of ICSC. REAP additionally appointed G. L. Blackstone & Associates principal G. Lamont Blackstone as acting executive director of REAP as Manikka Bowman moves on to The Nature Conservancy. Blackstone was a past volunteer faculty adviser for Project REAP.
By Brannon Boswell
Executive Editor, Commerce + Communities Today