Mixed-Use Redevelopment: Transforming Shopping Malls into Thriving Mixed-Use Destinations
- Alketa
- 3 hours ago
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Introduction: A New Life for Dead Malls
Once icons of suburban prosperity, many U.S. shopping malls are now grappling with empty stores and dwindling foot traffic. The rise of e-commerce and shifting consumer habits have left roughly a quarter of the nation’s 1,000 remaining malls at risk of closure in the next few years. Anchor retailers like Sears and Macy’s have shuttered dozens of locations, leaving massive vacancies in their wake. In fact, mall vacancy rates hit about 8.7% by the end of 2024, more than double the average rate for all retail properties. As traditional malls struggle, owners and investors are turning to Mixed-Use Redevelopment – converting malls into multi-purpose destinations that blend residential, office, hospitality, and entertainment uses. This adaptive reuse approach not only replaces lost retail tenants with new revenue streams but also revitalizes communities by introducing walkable “downtown” environments on once underutilized mall sites. The trend is accelerating: nearly half of all recent mall redevelopment projects have been mixed-use in nature. From New Jersey to California and Texas, successful case studies show how dead malls can be reborn as thriving hubs of activity. This report explores the economic forces behind mall decline, examines prominent mall-to-mixed-use transformations, and analyzes the financial and urban planning benefits for developers and investors. It also discusses the challenges – from zoning hurdles to community opposition – and offers strategic planning recommendations for those considering the adaptive reuse of shopping centers. The goal is to provide U.S. real estate investors and developers with a clear, insightful roadmap to harnessing the Mixed-Use Redevelopment trend.
Economic Pressures Driving the Decline of Traditional Malls
Multiple economic headwinds have converged to erode the once-dominant position of the American shopping mall. E-commerce growth is a primary factor: online sales accounted for about 15.6% of total U.S. retail sales by Q3 2023, up from barely 1% two decades ago. This surge in online shopping has siphoned away mall foot traffic – by 2023, indoor mall visitation was still ~4.6% below pre-pandemic levels. Consumers who do visit malls now spend less time and make fewer trips, undermining the traditional model of mall-based impulse buying.
Compounding the e-commerce effect is the wave of store closures and anchor tenant failures. Department store chains that once drew crowds to malls – including Sears, JCPenney, Lord & Taylor, and Macy’s – have closed hundreds of locations nationwide. Their departure creates large vacancies that are hard to fill, often triggering a domino effect of smaller shop closures. Even as some retailers recover post-pandemic, legacy malls are no longer viewed as the “highest and best use” for prime real estate when so many stores sit empty. As a result, analysts project that by 2028 the U.S. may have as few as 900 malls remaining (down from roughly 1,200 today), and up to 87% of large malls could close within 10 years if current trends persist.
Another pressure point is rising interest rates and tighter financing conditions in recent years. The Federal Reserve’s rate hikes in 2022–2024 pushed borrowing costs to their highest levels in over a decade, which directly impacts mall owners and retailers. Higher interest rates make it more expensive to refinance mall mortgages or fund renovations, and they also crimp consumer spending. According to an industry report, elevated rates (around 4.3% as of mid-2025) significantly hurt mall operators by increasing maintenance costs and straining retailers’ balance sheets. Smaller retail tenants in particular struggled with cash flow as debt costs rose, leading some to shut down. In turn, mall landlords faced declining rent collections and higher capital expenditure needs to keep aging properties attractive. This high-cost, low-revenue dynamic has made many mall investments financially unviable.
Vacancy and value erosion are the inevitable outcomes of these trends. By late 2024, U.S. malls averaged nearly 9% vacancy (and over 13% at lower-tier “Class C” malls), compared to about 4–5% vacancy for more in-demand retail formats like neighborhood shopping centers. Struggling malls not only lose tenants but also see their property values plummet. On average, a vacant regional mall will sell for 43% below its original acquisition price – a staggering destruction of value for investors. Moreover, some empty malls sit dark for years; the typical closed mall remains unused for almost 4 years, contributing to urban blight and lost tax revenue. With net absorption of mall space turning negative by 3.3 million square feet in 2024, the oversupply of obsolete retail space is clear.
In summary, the traditional mall faces a perfect storm of shrinking demand and financial stress. E-commerce convenience, changing consumer preferences (toward experiences or online shopping), plus macroeconomic factors like interest rates have all undermined the old retail-only mall model. Many sites can no longer justify themselves purely as retail properties. This economic reality sets the stage for a new use case: redeveloping malls into diversified, mixed-use properties that can better withstand 21st-century market forces.
Case Studies: Malls Reborn as Mixed-Use Destinations
Despite the doom and gloom surrounding dead malls, a dynamic transformation is underway at many sites across the United States. Forward-thinking developers and local officials are repurposing shuttered malls into mixed-use complexes – essentially creating new neighborhoods that blend shopping, living, working, and leisure. These projects are demonstrating viable paths to turn derelict malls into economic engines once again. Below, we examine several high-profile Mixed-Use Redevelopment case studies in different regions (New Jersey, California, Texas, and Florida) to illustrate this trend:
New Jersey – From Mall to “Town Center”: In Eatontown, NJ, the Monmouth Mall (a 1960s-era enclosed mall) is being overhauled into Monmouth Square, a modern open-air town center. Following years of decline and partial demolition, developer Kushner Cos. secured $415 million in construction financing in 2024 to fund the project. The plan will add 1,000 new apartments (including 125 affordable units) and create landscaped, walkable public spaces on the site, alongside revamped retail anchored by a Whole Foods Market. Essentially, Monmouth Mall’s sea of parking and concrete will be reborn as a mixed community hub that draws residents and shoppers from surrounding towns. New Jersey is seeing other mall transformations as well – for example, the defunct Burlington Center Mall was recently redeveloped into “The Crossings,” a $600+ million mixed-use complex featuring industrial warehouses alongside retail, 500 apartments, and a planned hotel. This project not only created 700 jobs during phase one, but is on track to generate $5+ million in annual tax revenue for the local community once fully built. These Garden State examples highlight how adding housing and other uses to mall sites can address local needs (like affordable housing obligations) while breathing new life into stagnant properties.
California – Malls Addressing the Housing Crisis: In high-cost California, adaptive reuse of malls for housing has gained momentum as a solution to the housing shortage. A striking example is in Cupertino, CA, where the failed Vallco Shopping Mall is being redeveloped into The Rise, a mixed-use district near Apple’s headquarters. After the mall’s occupancy fell to just 24%, the site was demolished and Sand Hill Property Co. won fast-track approval under a state housing law (SB 35) to build over 2,600 housing units on 50 acres of mall land. The project (slated to start construction in late 2026) will include 890 affordable units, offices, shops, and 7 acres of new parks and plazas. By fulfilling more than half of Cupertino’s entire affordable housing mandate in one project, this mall conversion shows the huge community impact such redevelopments can have. In Southern California, Orange County’s aging malls are also transforming: the Westminster Mall is planning a mixed-use campus with 3,000 residential units, a 425-room hotel, and extensive green space. Nearby, Laguna Hills Mall’s redevelopment (branded “Five Lagunas”) will feature 1,500 housing units, office space, hotel accommodations, and new retail attractions. These projects turn dying malls into opportunity sites for much-needed housing and walkable urban centers. As one California policymaker noted, converting “dead malls” into residential hubs is a win-win that addresses the state’s housing crisis while revitalizing neighborhoods.
Texas – Big Redevelopments in Booming Markets: In fast-growing Texas, large suburban malls are being reimagined as mixed-use districts to capitalize on population and job growth. A case in point is Dallas’s former Valley View Center Mall. After sitting mostly vacant for years, the 100-acre site (now branded as part of “Dallas Midtown”) finally broke ground in 2025 on a new phase called Premier at Midtown – a $85 million project with 296 luxury apartments and ground-floor retail. This six-story development, scheduled to open in 2027, is the first of several mixed-use buildings planned for the site. Notably, the developers had to overcome financing challenges during a high-interest environment; they brought in unconventional partners – Toyota Motor Corp. and Panasonic – as equity investors in a joint venture to get the project off the ground. With interest rates beginning to ease and strong backing from these corporate partners and a local bank, the long-stalled mall redevelopment is now underway. The vision for Dallas Midtown includes creating an “International District” with high-density housing, office space, parks, and retail to keep pace with Dallas’s urbanization. Elsewhere in Texas, similar mall makeovers are in progress – e.g. Plano’s The Shops at Willow Bend is adding apartments and single-family residences in a project called “The Bend,” and Houston’s former Northwest Mall site is slated for a massive transit-oriented development (including a high-speed rail terminal). These endeavors reflect Texas’s appetite for turning obsolete retail centers into modern mixed-use destinations that cater to both new residents and businesses.
Florida – High-Potential Mall Conversions: Florida’s booming population and pro-development policies have made it a hotbed for mall redevelopment opportunities. In Fort Lauderdale, the owners of the 1980s-era Galleria Mall have proposed a sweeping plan to integrate the mall into a new mixed-use neighborhood featuring nine residential towers, a 170-room hotel, and affordable housing units. Enabled in part by Florida’s 2023 Live Local Act – which encourages repurposing commercial sites for housing – this plan aims to transform the half-vacant mall into a dense urban district. However, it faces the common hurdle of community concerns: an initial 2023 proposal met with neighbor opposition over height and traffic impacts, showing that developer-community negotiation will be key in Florida projects. In Tampa, the former University Mall has been successfully reborn as RITHM@Uptown, a $1 billion mixed-use “innovation district” with research labs, offices, student housing, and entertainment venues on a once-blighted mall property. And in Jacksonville, the struggling Regency Square Mall was acquired in 2025 by a local developer for a mixed-use redevelopment dubbed “The Nexus” – plans include multifamily residential communities and new retailers to anchor the revitalization of the surrounding district. These Florida cases underscore both the potential and challenges: the state’s rapid growth presents huge demand for new housing and commercial space, and policies are tilting in favor of adaptive reuse, but developers must thoughtfully address local concerns through community engagement and smart planning.
These diverse case studies share a common theme: by integrating multiple uses, former malls can serve their communities in new ways and restore economic vitality. Whether it’s adding thousands of homes in California, creating a town-center in New Jersey, leveraging corporate partnerships in Texas, or tapping policy incentives in Florida, developers are demonstrating creativity in repurposing mall real estate. The next sections will delve into the concrete benefits these mixed-use projects offer to investors and cities, as well as the hurdles to overcome en route to success.
Financial Benefits for Developers and Investors
For real estate developers and investors, redeveloping a mall into a mixed-use property unlocks a more diverse and potentially lucrative set of revenue streams compared to the single-use mall model. By reallocating portions of a mall’s vast square footage to new functions (like apartments, offices, hotels, or entertainment venues), owners can mitigate the reliance on retail rents and tap into sectors with stronger demand. Key financial benefits and opportunities include:
Multiple Income Streams: A traditional mall’s income is tied almost entirely to retail leases (and percentage rents from retail sales). In a mixed-use redevelopment, the site generates revenue from residential leases, office leases, hotel operations, event spaces, and more – alongside a downsized but refreshed retail component. This diversified income mix creates a more resilient portfolio for investors. For example, adding hundreds of apartment units on mall property brings steady residential rental income (often with 95%+ occupancy rates in many markets), which can offset the volatility of retail earnings. Hotels on-site can capture traveler spending and bolster overall cash flow. Entertainment uses (such as cinemas, food halls, bowling or esports, fitness centers, etc.) may pay rent or share profits, and they drive foot traffic that supports the retail tenants. Overall, the property’s Net Operating Income (NOI) becomes less correlated with any single industry, reducing risk. As the National Association of Realtors observed in a study, many mall owners are “putting more effort into diversifying their tenant portfolio away from sole retail,” incorporating experiential and non-retail uses to ensure long-term economic viability.
Improved Occupancy and Stabilized Cash Flow: By design, mixed-use projects enjoy broader demand – if retail is weak, perhaps the apartments are still full or the offices are leased, smoothing out occupancy levels. Malls retenanted as mixed-use “mini cities” often achieve higher overall occupancy than before redevelopment. For instance, retail vacancy in top-tier mixed-use centers can drop significantly as the remaining stores benefit from on-site residents and workers. Residential components typically maintain low vacancy (U.S. apartment vacancies were ~7% in late 2025, and often lower in well-located mixed-use sites). Even during economic dips, people still need housing, which provides baseline income to the landlord. This stability is attractive to lenders and investors; indeed, banks have financed roughly 41% of mall repurposing projects in recent years, reflecting confidence in the more reliable cash flows of mixed-use assets. In short, repurposing a mall from a shaky retail asset into a multi-faceted property can turn a cash flow rollercoaster into a steadier income engine.
Higher Property Values and ROI Potential: Successful mixed-use redevelopments tend to command premium valuations in the real estate market, often far exceeding the value of the old mall. Investors pay a premium because these projects yield both higher cash flows and carry strong future growth prospects (e.g. through phased additions). As one retail real estate expert noted, mixed-use projects are “in high demand from investors” and trade at strong price levels when sold. The integration of uses creates synergies that boost rents and NOI beyond what each use could achieve alone. For example, at the Avalon mixed-use development in Georgia, retail rents hit $45/sq. ft. (way above the $25–$30 typical for that area) thanks to the on-site housing and office foot traffic – a 15–25% rent premium attributable to the mixed-use design. Similarly, Avalon’s apartments rented for ~$1,750/month versus ~$1,200 in neighboring stand-alone communities. When investors underwrite such properties, they “apply strong cap rates against better cash flows,” effectively boosting the asset’s appraised value. In practical terms, a dead mall that might have sold at a distressed value (often 40%+ below its original cost if left vacant) can, after redevelopment, be worth multiples of that figure. Case in point: the Belmar project in Lakewood, CO transformed a failed mall into a $750 million open-air town center with 1,300 residential units and 900,000 sq. ft. of retail/office, supported by public financing – a massive increase in value over the old mall. For developers, this value creation translates into higher internal rates of return (IRRs) on their investment, especially if they can leverage tax incentives or government grants (such as federal Opportunity Zones or the proposed GREATER Revitalization of Shopping Centers Act). While redevelopment projects are capital-intensive, the end product – a stabilized mixed-use asset – often achieves lower cap rates (e.g. 5–7%) due to strong demand from institutional buyers, meaning developers can refinance or sell at a sizable profit.
New Revenue Avenues and Partnerships: Mall redevelopments also enable creative financial arrangements that weren’t possible under the old model. Developers can sell or ground-lease portions of the site to specialty operators – for instance, selling a pad to a multifamily developer or partnering with a healthcare provider to open a clinic in the former mall. In New Jersey, Clarion Partners and MRP Industrial did exactly this by selling part of the Burlington mall site to an apartment developer (JAG) for a 500-unit project, injecting capital and expertise into the venture. Public-private partnerships can bring in funding as well: cities might contribute via tax-increment financing or infrastructure investments if the project promises community benefits (Belmar’s $1 billion redevelopment was facilitated by a city urban renewal authority issuing bonds and sharing infrastructure costs). Another growing avenue is experiential and entertainment concepts sharing revenue with landlords – e.g. a family entertainment center might pay base rent plus a percentage of sales, giving the property owner upside in good times. Additionally, by embracing mixed-use, mall owners become eligible for financing in categories beyond retail REIT loans – such as multifamily construction loans, HUD housing loans, or business development grants. This broader financing landscape can reduce the weighted cost of capital for the project. The bottom line is that a thoughtfully executed mixed-use mall redevelopment can turn a financially stagnant asset into a robust performer with multiple profit centers, higher occupancy, and a market value far above its previous life as a mall.
To quantify some of the differences, the table below compares a hypothetical mall-to-mixed-use redevelopment scenario on key financial and operational metrics:
Metric | Traditional Enclosed Mall (Retail-Only) | Mixed-Use Redevelopment (Retail + Residential/Other) |
Typical Vacancy Rate | High – ~8–11% mall vacancy (far above average retail). Class B/C malls often worse (10–13%+). | Lower overall – e.g. apartments ~5% vacant, new retail <5% once stabilized. Diverse uses keep blended vacancy low. |
Primary Revenue Source | One-dimensional: retail store leases (and percentage of retail sales). Highly vulnerable to retail market swings. | Multiple streams: apartment rents, office leases, hotel nightly revenues, entertainment and food tenants, plus retail rents. More balanced income portfolio. |
Annual Foot Traffic | Declining footfall (few million visits/year and falling) as consumers shift online. Peaks only during holiday shopping; off-peak periods see light use. | Increased and diversified traffic – residents (on-site population) + office workers + hotel guests ensure activity beyond just weekend shoppers. Steady all-day foot traffic supports shops and eateries. |
Property Value Trend | Often depreciating – distressed malls may sell at 40%+ loss versus original value. Limited buyer pool due to bleak retail outlook. | Value appreciating – high investor demand for successful mixed-use projects drives strong pricing. Higher NOI and rent premiums (15–25% above area norms for retail in mixed-use) boost valuation. |
Estimated ROI (Cap Rate) | Higher cap rate (~8–10%+) reflecting risk and low growth. Many mall REITs trade at discounts; pure retail income seen as risky. | Lower blended cap rate (~6–7% or less) due to stabilized cash flow and institutional appeal. Overall project Internal Rate of Return (IRR) can be strong if value-add is achieved (often double-digit IRRs after lease-up). |
Table: Comparison of a struggling traditional mall vs. a mixed-use redeveloped mall property. The mixed-use model typically achieves lower vacancies and higher overall income, yielding a more valuable asset with potentially higher ROI for investors. (Sources: ICSC, Capital One Shopping report, industry case studies)
Urban Planning & Architectural Benefits
Beyond the balance sheet, mixed-use mall redevelopments offer significant architectural and urban planning advantages for communities. By replacing monolithic, car-centric shopping complexes with thoughtfully designed mixed-use neighborhoods, these projects can dramatically improve the local urban fabric. Key benefits include:
Restoring Walkability and “Main Street” Appeal: One of the biggest complaints about old malls is that they are isolated, inward-facing boxes surrounded by oceans of parking. Mixed-use redesigns flip that model to create outward-facing, pedestrian-friendly environments. Former mall sites are often reconfigured into street grids or open-air layouts that mimic a traditional downtown. Shops and restaurants open onto sidewalks, and new streets connect the site with surrounding neighborhoods. Plazas, courtyards, and pocket parks introduce human-scale public spaces. For example, the Belmar redevelopment in Colorado turned a dead mall into 22 blocks of walkable streets, complete with a central plaza and park for community events. Similarly, projects like Mashpee Commons in Massachusetts or Eastern Hills Mall in New York seek to establish “10-minute neighborhoods” where one can walk from home to shops, offices, and parks within minutes. This improved walkability not only benefits residents and shoppers but also promotes public health and social interaction. The design principle is to “humanize” former mall spaces, breaking up big boxes and vast lots into inviting streetscapes that encourage strolling and serendipitous encounters.
Higher Density & Smart Growth: Mall redevelopments typically introduce mixed-use density on parcels that were previously underutilized single-story retail. By adding multi-story residential and office buildings, these projects increase the density of both population and built space in a controlled, planned way. This smart growth approach helps counter urban sprawl: instead of building new developments on greenfield sites, growth is redirected to an existing developed site (the mall) with infrastructure already in place. Higher density supports better transit and can justify improvements like new bus routes or rail stations near the site. For instance, Phoenix’s Metrocenter Mall redevelopment was catalyzed by a new light-rail extension, integrating transit access into the project. In many cases, cities rezone mall properties for mixed-use and higher density specifically to encourage inclusion of housing. California’s push to turn dying malls into housing is explicitly about leveraging these large parcels for infill development, thus easing regional housing shortages without consuming new land. The addition of hundreds or thousands of residential units on a mall site can create a new urban neighborhood virtually overnight, boosting housing supply in a sustainable location. Moreover, vertical mixed-use (with apartments or offices above retail) maximizes land efficiency and creates round-the-clock presence (daytime workers, nighttime residents) that keeps the area lively.
Revitalized Public Space & Community Amenities: Reimagined mall projects often incorporate public and civic spaces that were lacking in the original design. Old malls were private properties with any “public” space limited to indoor corridors for shoppers. In contrast, new plans frequently set aside land for parks, community centers, plazas, outdoor performance areas, or even civic buildings. These elements turn the development into a community gathering place, not just a commercial center. For example, the Southridge Mall redevelopment in Wisconsin is centered around a “village green” – a landscaped central park/plaza for farmers’ markets, concerts, and local events. Such amenities improve quality of life for residents and can become a point of pride for the town. Mixed-use redevelopments also tend to incorporate placemaking design – public art, fountains, playgrounds, and unique architectural features – to give the site a distinct identity tied to the local community. In doing so, they often honor the history of the place; for instance, Jacksonville’s Nexus at Regency project will reuse bricks from the old mall in its signage and design, preserving a link to the past. By opening up formerly closed-off mall land for public use and recreation, these projects help stitch the site back into the community fabric.
Improved Connectivity and Infrastructure: Transforming a mall into a mixed-use district typically involves significant infrastructure upgrades that benefit the broader area. New street connections break up super-blocks, easing local traffic congestion by dispersing vehicles over a grid instead of funneling all cars through one or two mall entrances. Pedestrian and bicycle infrastructure is added – e.g. multi-use trails, bike lanes, better crosswalks – encouraging alternative transportation. Some projects integrate transit hubs or shuttles to connect to regional transit lines. Additionally, modern mixed-use sites often come with sustainability improvements: updated stormwater systems, energy-efficient buildings, EV charging stations, and green landscaping. The Burlington “Crossings” project in NJ, for example, installed a nearly mile-long walking path around the site and new NJ Transit bus stops to serve employees and residents. It also undertook $3 million in road improvements (signals, turn lanes, sidewalks) around the mall to handle increased activity safely. These enhancements not only support the project but also solve long-standing traffic and utility issues in the vicinity of old malls. In many cases, local governments partner by providing some funding or fast-tracking approvals for infrastructure upgrades, recognizing that a successful mixed-use redevelopment can anchor the revitalization of an entire district (as seen in Lakewood, CO where Belmar’s success spurred other nearby investments).
Urban Design that Fosters Safety and Activity: The design of mixed-use centers addresses some social issues that malls had, such as empty parking lots at night or unwelcoming, monolithic structures. With people living on-site and activities from morning through evening, there are “eyes on the street” and natural surveillance, which can reduce crime and make the area feel safer. Good lighting, active storefronts, and continuous building frontages create an environment where people feel comfortable walking at all hours – unlike a dead mall that might feel deserted after 9 pm. Additionally, introducing community services (libraries, medical clinics, education facilities) into the mix can bring in a broader cross-section of the public and ensure the space serves multiple needs. Several repurposed malls have become homes to public institutions (e.g. community colleges, municipal offices, healthcare centers) which both anchor the development and provide valuable services. All of this contributes to a vibrant live-work-play ecosystem. As urban planner Galina Tachieva said of the Mashpee Commons mall retrofit, it’s evolving into “the heart and soul of the community” after decades of effort – a testament to how design and planning can turn a fading mall into a beloved town center.
In essence, Mixed-Use Redevelopment projects do more than generate rent – they create place. By embracing principles of good urban design, they convert dead malls into dense, walkable, multi-use districts that can become new downtowns or neighborhood cores. This yields long-lasting social and environmental benefits, from reduced vehicle miles traveled (as more people live closer to amenities) to stronger sense of community identity. Cities and counties are increasingly updating their comprehensive plans and zoning codes to encourage such outcomes on aging mall sites, knowing that a well-executed project can uplift an entire area.
Challenges and How to Overcome Them
While the case for mixed-use mall redevelopment is compelling, these projects are extraordinarily complex undertakings. Developers and stakeholders face a gauntlet of challenges – legal, financial, logistical, and social – when attempting to retrofit a dead mall. Understanding these hurdles is key to overcoming them. Below we outline major challenges and strategies to address each:
Zoning, Entitlements & Regulatory Hurdles: Many malls are still zoned purely for commercial use, so changing to a mixed-use or residential-inclusive plan often requires rezoning or special permits. The entitlement process can be time-consuming and politically fraught. Legacy malls might also have restrictive covenants or easements (sometimes held by former anchor stores) that limit redevelopment options. For example, at Eastern Hills Mall (NY), anchor tenant agreements imposed no-build zones and access restrictions that the design team had to work around to implement a town center plan. Strategy: Engage early and collaboratively with local governments to pave the way for zoning changes. Cities increasingly welcome proposals to revitalize “greyfield” sites, and some states have even passed laws to expedite approvals (e.g. California’s SB-35 which fast-tracks qualifying housing projects on infill sites). Developers should highlight the public benefits – housing, jobs, tax base – to build a case for rezoning. It’s also wise to negotiate with anchor owners or buy out their interests if needed; in some cases, mall owners have purchased former anchor parcels to gain site control. Public-private partnerships can help, too – municipalities may offer incentives or grants in exchange for desired uses like affordable housing or transit facilities. The GREATER Shopping Centers Revitalization Act pending in Congress, for instance, proposes federal grants to localities that assist mall conversions with affordable housing and transit-oriented designs. Clearing the entitlement path is often step one to make these projects feasible.
Fragmented Ownership & Stakeholder Alignment: A typical mall property can involve multiple owners: the mall operator, department store parcels owned by different companies, outparcel retail (restaurants, banks) owned by third parties, etc. This fragmented ownership is a major challenge – it’s hard to implement a cohesive master plan if you can’t get all parties on board. Any one owner can potentially veto changes (for example, through reciprocal easement agreements that require consent for redevelopment). Strategy: Consolidate ownership where possible, or form joint ventures between the various property owners to pursue a unified redevelopment. This often requires delicate negotiations or creative deals. One tactic is for a lead developer to buy out smaller parcels over time until they control the critical mass of the site – as was done in Burlington, NJ, where Clarion/MRP acquired six separate parcels (including former anchors and even a jug-handle road parcel) to assemble the 100+ acre mall site for redevelopment. If outright purchase isn’t viable, establishing a shared vision via a redevelopment agreement is key: all stakeholders agree on a master plan and perhaps coordinate timing (e.g. one owner builds apartments while another refits the retail). Government can assist by declaring the area in need of redevelopment and using tools like land swaps or even eminent domain in extreme cases. Ultimately, fostering a spirit of collaboration is crucial – as Urban Land Institute experts note, transforming malls requires combining “architecture, urban planning, and landscape teams in a shared vision,” and working closely with city officials. Regular communication among owners, tenants, and authorities helps align interests and prevent turf battles from derailing the project.
Financing and Economic Viability: Redeveloping a mall is expensive – demolition, infrastructure, and new construction can run into hundreds of millions of dollars. Often the cost of a large-scale mixed-use project “may exceed the return on investment” if taken on by private developers alone, especially in weaker markets. High interest rates or tight credit conditions (like those seen in 2023–2024) add further difficulty, as do rising construction costs. Lenders may be skittish about the uncertainty of such projects. Strategy: Use phased development and creative financing to spread risk. Phasing means you don’t build everything at once – perhaps start by developing one portion (say, one residential building and some retail) to generate income, then finance the next phase from that cash flow. This approach is often essential; as one architect noted, “everything can’t shut down and reopen three years later” – maintaining some operating income (like keeping part of the mall or some anchors running) can support the financing of initial phases. On the financing side, explore a capital stack that includes a mix of debt, equity, and public funding: construction loans, mezzanine debt, equity partners (even non-traditional ones like the Toyota/Panasonic JV in Dallas), municipal bonds or tax-increment financing, and possibly federal/state grants or tax credits (for affordable housing, brownfield remediation, etc.). Creating Special Purpose Entities or improvement districts can enable bond financing paid back by future increased property taxes. Another strategy is pre-leasing to key tenants (like committing a grocer or entertainment anchor) to strengthen the business case and satisfy lenders that there will be revenue. In short, patience and financial agility are needed – as one redevelopment principle states, “Timing is everything: patience is key to unlocking potential”. Projects might take 5–10 years to fully realize, and developers must secure interim funding and adjust to market changes along the way.
Community Opposition and Political Risks: Malls were often beloved community landmarks, so proposals to radically change them can spark local resistance. Neighbors may oppose added density (“not in my backyard”), worry about traffic congestion from new housing, or dislike the height of proposed buildings. For instance, in Florida the plan to add high-rise towers at Galleria Mall met with community pushback that forced revisions. Similarly, Mashpee Commons in MA faced residential opposition that slowed its addition of housing for decades. If local voters or politicians aren’t convinced, projects can be delayed or even derailed. Strategy: Engage the community early and often. Developers should involve residents, community groups, and local business owners in the planning process through public meetings, workshops, and transparent communication. Showing detailed renderings and traffic studies can alleviate fear of the unknown. Often, adjusting the plan to include community benefits will turn opponents into supporters. This could mean incorporating a community center, preserving some open space, adding affordable housing units, or improving local roads and schools as part of the project. In New Jersey, the Burlington Mall’s developers pivoted from an initial all-warehouse plan to a mixed-use approach after feedback from local officials and the public, who wanted housing and retail components for a more balanced development. That collaboration over three years ultimately yielded approvals for a better plan. Having local government champions – mayors or council members who see the long-term benefits – is critical, so working closely with them and addressing constituent concerns can smooth the political path. Another tactic is phasing construction to minimize disruption (so the site isn’t an active construction zone all at once). Overall, demonstrating that “this project will revitalize our community, not ruin it” is the message to convey. When the public is on board, entitlement and permitting go much more smoothly.
Design and Construction Challenges: Retrofitting an existing mall structure (if reuse is attempted) or demolishing and rebuilding on a mall site presents technical hurdles. The old mall may have environmental issues (asbestos, soil contamination), awkward site layouts, or structural limitations. Designing a cohesive mixed-use layout on a lot originally meant for a single building and parking requires ingenuity – especially if parts of the mall (like a successful anchor store or a church tenant) will remain during construction. Parking must be rethought, as mixed-use needs a different parking strategy than a pure retail use (shared parking models, possible parking garages, etc.). Strategy: Leverage experienced design teams and phase construction carefully. Successful projects bring together architects, urban planners, traffic engineers, and environmental consultants from the start to map out solutions. Environmental remediation can often be funded by grants or low-interest loans (the Belmar project tapped EPA loans to clean up the mall’s soil contamination). For design, the guiding principles include improving site circulation and connectivity, and creating an attractive public realm. One ULI guideline is “Improving circulation: from labyrinth to lively hub” – simplifying navigation and access compared to the often confusing mall layout. Structured parking is usually introduced, but it’s done in stages: for example, build a parking garage in one corner so you can free up other surface lots for buildings, eventually replacing more lots with garages as needed. Maintaining some of the mall open during construction (if feasible) can keep revenue flowing – many projects wall off a portion of the site to redevelop while the rest of the mall trades, then flip. It’s like performing surgery on a living patient. Good construction management and tenant coordination are essential so that existing uses (maybe a remaining anchor store or community college in the mall) can coexist until new spaces are ready. Flexibility is key too – developers should be ready to pivot uses if market conditions change (e.g. if office demand weakens, consider adding more residential or an educational campus use). By adopting a flexible, phased approach and solving design problems incrementally, even highly complex redevelopments can progress without total shutdown.
In summary, turning a dying mall into a mixed-use showpiece is seldom easy. Common pitfalls include protracted approvals, financing gaps, stakeholder conflicts, and local skepticism. However, as more case studies emerge, a playbook is being written. The formula for success blends collaboration (public/private teamwork), patience, flexibility, and a clear vision that aligns with community goals. Those developers who navigate these challenges successfully can unlock enormous value – not only for themselves, but for cities and residents who gain a renewed place to live, work, and play.
Regional Outlook: High-Potential Markets for Mall Conversions
Across the United States, certain regions stand out as especially ripe for mall-to-mixed-use redevelopment, due to economic and demographic factors. Real estate investors may want to pay close attention to opportunities in these high-potential states, where the convergence of need and support for adaptive reuse is strongest:
Florida: Boasting one of the nation’s fastest-growing populations, Florida is a prime candidate for mixed-use redevelopments on aging mall sites. The state’s recent Live Local Act (2023) encourages converting commercial properties into residential by overriding local zoning to allow higher-density housing (especially affordable units) on such sites. This legislative push, combined with booming in-migration, means demand for new housing and mixed-use communities is sky-high. South and Central Florida metros have multiple struggling malls in well-populated areas (e.g. Miami-Dade’s malls, Tampa’s University Mall) that are already being targeted for overhaul. Investors can also find supportive local governments; many Florida cities see mall redevelopments as a way to rejuvenate blighted corridors. However, community engagement is crucial given traffic concerns in suburban areas – successful projects, like Tampa’s RITHM, heavily involved local institutions (in that case, University of South Florida and tech firms) to create an innovation hub that people rallied behind. With the right strategy, Florida offers a fertile landscape where mall conversions can yield vibrant mixed-use districts that cater to the state’s growth in residents, businesses, and tourists.
Texas: The Lone Star State is experiencing prolific economic and population growth, with metro areas like Dallas-Fort Worth, Houston, and Austin expanding rapidly. This growth, coupled with Texas’s ample land and pro-development climate, presents unique opportunities to re-imagine older retail centers. Texas suburbs often have large 1970s–90s malls that have lost relevance (e.g. Dallas’s Valley View, Houston’s Northwest Mall, Austin’s Highland Mall). Given the strong demand for housing and modern office space, these large sites can be reborn as mixed-use “uptowns” or town centers. Texas developers have shown willingness to undertake ambitious projects (such as the Midtown Dallas plan encompassing housing, offices, parks, and potentially even new transit). The state and municipal governments tend to be business-friendly, offering tax incentives and relatively streamlined permitting. Moreover, Texas’s regional retail vacancy rates remain lower than Rust Belt areas, implying some retail in a mixed-use context can still thrive (retail availability in booming Texas markets is actually tight at ~4%). Investors should target well-located malls near highways or transit, and leverage Texas’s tradition of public-private partnerships (for instance, special financing districts in suburban cities) to fund infrastructure. The high job growth in Texas also means office and industrial components can be part of the mix (some failing malls in Texas are being partly converted to corporate campuses or logistics hubs). In sum, Texas offers scale and growth – an ideal combo for tackling major redevelopments that can redefine entire submarkets.
California: With its chronic housing shortage and high real estate costs, California arguably has the most to gain from mall redevelopments that include residential. The state government has been proactive – beyond SB-35, laws like AB-2011 now allow housing on underused commercial sites by-right in many cases. Coastal California’s malls sit on extremely valuable land (often at crossroads of dense communities) that could support thousands of housing units and new commercial uses. Several high-profile projects are underway (Westminster, Laguna Hills, Cupertino as discussed), and dozens more malls in the Bay Area and Southern California have plans or proposals for partial or full mixed-use conversions. Investors should note that California projects can be complex (due to environmental reviews like CEQA and potential NIMBY opposition), but the rewards are substantial if executed. Land values and rents in CA are high enough to justify expensive construction, and there is often public subsidy available for the affordable housing component of mixed-use projects. Transit-oriented development is a key theme – many malls in Los Angeles and Silicon Valley are near transit lines and are being eyed for dense redevelopment to meet climate and housing goals. California’s commitment to sustainability also means mall redevelopments there often incorporate green building practices and renewable energy (e.g. installing solar panels on large mall rooftops). For developers with patience and deep pockets, California malls represent golden opportunities to create landmark mixed-use communities in supply-constrained markets.
New Jersey (and the Tri-State NYC region): The densely populated states of the Northeast, particularly New Jersey, New York, and Connecticut, have numerous obsolete suburban malls in need of new purpose. New Jersey in particular, being a suburban-dominated state with a high median income, has seen strong interest in luxury mixed-use projects on mall sites (like the aforementioned Monmouth Mall and Burlington Center projects). The proximity to New York City job centers makes many NJ mall locations attractive for apartments and satellite offices. Additionally, New Jersey has shown policy support: the co-sponsor of the federal GREATER Act is NJ Senator Cory Booker, reflecting local desire to solve the mall problem. High-potential states in the Northeast offer great demographics for mixed-use (education, income, population density), though navigating local zoning boards can be challenging due to entrenched community preferences. Still, success stories like Easton Town Center in Columbus, OH or Belmar in Colorado have inspired Northeastern suburbs to be more open to bold redevelopments. Investors looking at this region should identify malls with location advantages (near transit, along commuter corridors, or in town centers) and be ready to assemble land parcels from multiple owners. While construction and labor costs are high in this region, the end product can achieve premium rents and condo sales prices given the lack of large developable land elsewhere. In short, the Tri-State area’s dead malls are prime for adaptive reuse as mixed villages – and those who succeed in navigating local politics can unlock significant value in these high-demand markets.
Of course, opportunities are not limited to these states – mall redevelopments are happening from Michigan (Northland Mall) to Georgia (North DeKalb Mall) and beyond. But Florida, Texas, California, and New Jersey illustrate different drivers (sunbelt growth, housing need, density, etc.) that make mixed-use projects particularly viable. Investors should tailor their approach to regional conditions: e.g. emphasize the housing solution in California, the lifestyle amenities in Florida’s retiree and tourist-heavy locales, the live-work convenience in New Jersey, and the placemaking in Texas’s booming suburbs. By understanding the local market context, developers can identify which mall sites have the right combination of demand, community support, and economic upside to ensure a successful transformation.
Strategic Design and Planning Approaches for Adaptive Reuse
For developers considering an adaptive reuse of a shopping mall, a strategic approach is vital from planning through execution. Successful mall redevelopments follow several key design and development principles. Below are recommended strategies and best practices for turning a mall into a thriving mixed-use community:
Forge Public-Private Partnerships Early: Proactive collaboration with local government is essential. Work closely with city planners and officials to create a shared vision for the site and streamline entitlements. Public sector support can come in the form of expedited approvals, infrastructure funding, tax incentives, or zoning changes – all of which can make or break a complex redevelopment. Regularly engage with planning commissions and city councils, incorporate feedback, and demonstrate how the project aligns with community development goals. A strong partnership can also help secure public financing tools (e.g. TIF districts, grants) that improve project viability.
Embrace a Phased, Flexible Development Plan: Given the scale of mall projects, don’t attempt everything at once. Plan the redevelopment in phases that can adapt to market conditions. Perhaps start by building residential components or open-air retail in one section while other parts of the mall remain operational to provide cash flow. Use interim uses (pop-up retail, community events in the parking lot, etc.) to keep the site active during transition. A phased approach also spreads out capital expenditures and allows leasing/sales of one phase to fund the next. Maintain flexibility in your master plan – design blocks that can switch use (e.g. an office block could convert to residential if the office market weakens). This adaptability is crucial in today’s dynamic market.
Prioritize Mixed-Use Integration and Synergy: When planning the layout, intermix the uses rather than isolating them in separate corners. For example, place ground-floor retail and restaurants below apartments or offices to create street vibrancy. Situate a grocery store or entertainment venue where it’s easily accessible to both the public and new residents. The goal is to have each component benefit the others – residents provide captive customers for retail, daytime office workers enliven the area on weekdays, hotel guests patronize restaurants, etc. Thoughtful site design, like aligning new streets with existing ones and creating focal points (plazas, greens) that different uses face onto, will encourage people to circulate throughout the entire development. Mixed-use synergy is also a selling point to investors (strong multi-family + strong retail yields a better overall asset value), so ensure the design facilitates cross-pollination of activity among uses.
Improve Connectivity and “Stitch” the Site to its Surroundings: One guiding design principle is transforming the mall from an island into a connected piece of the community. Introduce new road connections through the site to break up superblocks – this could mean extending existing streets into the property or adding pedestrian pathways that link to adjacent neighborhoods. Ensure the development has multiple entry and exit points for cars, bikes, and pedestrians (more access points than the old mall had) to distribute traffic and promote walk-ins. If possible, integrate transit stops or shuttle services to nearby transit hubs. Pay attention to wayfinding and sight lines – where massive mall structures once blocked visibility, create visual corridors so people can see into the site and through it, making it feel welcoming rather than fortress-like. Essentially, the design should say “this is now part of town” instead of a standalone complex.
Create a Strong Sense of Place with Public Spaces: Successful adaptive reuses often hinge on establishing a new identity for the site. Do this by designing attractive public realms – e.g. a central town square, a main street, or a community park – that give the project a heart. Incorporate landscaping, street furniture, public art, fountains, or historic elements from the mall (like a reimagined signage or old artifacts) to create a unique atmosphere. Placemaking is critical: it turns a generic mall into a beloved local destination. As one design principle puts it, aim to transform an inward “labyrinth” into an inviting community hub. Plan programming for these public spaces (farmers markets, concerts, holiday festivals) to generate buzz and regular foot traffic. By honoring local culture or history in the design, you also gain community buy-in. A well-executed public space not only increases surrounding property values but can also allay concerns (residents see they are gaining a park, not just buildings).
Right-Size Parking and Embrace Multi-Modal Access: Malls were built for a driving era, often with excessive surface parking. In redeveloping, don’t let parking dominate the design – too much asphalt deadens the mixed-use vibe you want. Study actual parking needs for a mixed-use environment, which often allows shared parking (e.g. offices use spaces by day, residents by night) and reduction of overall spaces compared to separate uses. Replace large surface lots with structured parking garages placed strategically (perhaps wrapped with active uses or situated behind buildings). This frees up land for development and improves walkability. Also incorporate new mobility options: safe bike lanes and storage, ride-share pickup zones, maybe an e-scooter program or a shuttle. Make it easy for people to arrive without a personal car. In design terms, hide the parking as much as possible and beautify what remains (use landscaping, and make any garages visually appealing). The mantra is “parking with (re)purpose” – treat it as an opportunity (rooftop solar on garages, markets in parking lots on weekends) rather than a necessary evil.
Engage Stakeholders and Communicate Benefits: A softer strategy, but no less important: involve all stakeholders – community members, existing tenants, local businesses, and potential end-users – throughout the process. Host town halls, create a project website, use social media to share updates and renderings. Listening and adapting to reasonable community input can prevent costly delays. Also, publicly communicate the benefits of the redevelopment: quantify jobs to be created, tax revenue generated, and improvements (like “we will create 5 acres of new park space” or “provide 200 affordable housing units”). During construction, maintain goodwill by minimizing nuisances (traffic management, noise control) and keeping people informed. A transparent, inclusive approach will ease fears and build excitement – by the time of grand opening, the community should feel a sense of ownership and pride in the transformation.
By following these strategies – collaborating with government, phasing intelligently, integrating uses, designing for people, modernizing parking, and bringing the community along – developers can greatly increase the odds that their Mixed-Use Redevelopment project will succeed. Each mall-turned-mixed-use will have its unique challenges, but these guiding principles have emerged as consistent keys to turning a derelict shopping center into a thriving, sustainable destination. The result of careful planning and execution is a triple win: investors realize new value, residents gain a rejuvenated neighborhood asset, and cities solve blight while promoting smart growth.
Conclusion
The decline of the traditional mall, while often framed as a retail apocalypse, is better seen as an opportunity for rebirth. The wave of Mixed-Use Redevelopment sweeping across U.S. malls represents a proactive adaptation to economic realities and community needs. Rather than allowing dead malls to languish and drag down their surroundings, developers and cities are collaborating to reimagine these sites as mixed-use, community-centric hubs. The case studies and trends from 2024–2026 make it clear that this approach can yield enormous benefits:
Economically, repurposed malls diversify income streams and often become more valuable than ever, turning loss-making properties into profit-generators with long-term resilience. Investors are increasingly targeting these projects as the next frontier of real estate value creation.
Socially and urbanistically, these redevelopments bring housing, jobs, and amenities closer together, fostering walkable lifestyles and revitalizing neighborhoods. They help address housing shortages (adding thousands of units in some cases) and provide new public spaces where once there were empty parking lots. The transformation of malls into “main street” environments reconnects communities and offers a renewed sense of place.
For developers and planners, the mall retrofit trend has catalyzed innovations in design and strategy – from phased development models to novel public-private financing partnerships. Those who can navigate the challenges and engage stakeholders effectively are finding success even in a high-interest, post-pandemic world. As one industry outlook stated, “the future of these spaces lies in transforming them into vibrant, walkable mixed-use neighborhoods”, which in turn “boosts the surrounding area’s economy”.
U.S. real estate professionals should note that momentum is building: local governments are receptive, consumers are showing they crave these new experiences, and even retailers are adapting (with smaller format stores or new anchor concepts like grocery, fitness, or entertainment in mixed-use settings). The period of 2024–2026 is likely just the beginning of a multi-decade repurposing of retail real estate. Estimates that only 150 malls might survive a decade from now do not signal an end, but rather a transition – many malls will survive by evolving into something fundamentally different.
In the coming years, expect to see more headlines of “Mall XYZ to become a Mixed-Use Campus” in states from coast to coast. Each project will bring its own lessons, but collectively they underscore a core principle: adaptability. The built environment must adapt to changing economic and social patterns, and America’s shopping malls are undergoing that adaptation on a grand scale.
For investors and developers, the task is to approach these opportunities with open minds and robust plans – to preserve what made these sites valuable (location, scale, community significance) while infusing them with new life and purpose. By doing so, they are not just salvaging real estate, but also shaping the future of suburban and urban landscapes into more sustainable, inclusive, and prosperous forms. The mall as we knew it may be fading, but from its shell a new kind of community asset is emerging – one that could define “where we live, work, and gather” for the next generation.
Sources:
U.S. Census Bureau — Quarterly Retail E‑Commerce Sales
ICSC — market framing and mall count (regional + superregional ~1,200)
Urban Land Institute (ULI) / Urban Land Magazine
Cushman & Wakefield — “Future of B malls”
Galleria Mall, Fort Lauderdale, FL
Laguna Hills Mall / Village at Laguna Hills, C