Cities: Let developers turn zombie malls into bustling housing

Deserted Shopping Mall

Across the country, high housing costs and the resulting pressure to get more housing built are prompting city leaders to think outside the box. One increasingly common trend is the conversion of shopping malls into mixed-use developments incorporating both commercial retail and residential uses.

For commercial property owners and businesses, it can be a smart way to make better and more optimal use of antiquated properties. And for city leaders, it can be a way of revitalizing neighborhoods while bringing much needed housing online with less NIMBY (Not In My Backyard) backlash than normal. A new California law makes it easier for developers to build housing on commercial and retail sites.

Shifting shopping habits and the decline of malls

While some shopping malls have no doubt seen a rebound in the years since the start of the coronavirus pandemic, America’s malls have long been in decline. According to retail consultant Nick Egelanian, while there were 2,500 malls in the country back in the 1980s, there are just around 700 today.

Changing shopping habits – particularly due to the rise of e-commerce  – have and will continue to force shopping malls to adapt to shifting consumer demands. Some will be able to do so, many will not.

With their large physical footprint, made even bigger by sprawling parking lots, the conversion of shopping malls into much needed housing can be an attractive proposition. Rather than allow once bustling malls to devolve into blighted eyesores, cities have shown an openness to allowing developers to come up with more viable uses of the space.

There’s no shortage of examples.

Last December, for example, the Westminster City Council in Orange County, Calif., approved a sweeping plan for the Westminster Mall to be converted into a mixed-use development offering up to 3,000 residential units, at least 600,000 square feet of retail space, up to 425 hotel units and 17 acres of public open spaces.

In Phoenix, Arizona, at least three malls are undergoing redevelopment to provide upwards of 7,000 units of housing. The Metrocenter, which closed back in 2020, will be partly converted into 2,600 homes, while also offering commercial and park space. The Park Central Mall, which opened as the city’s first mall in 1957, has been gradually turned into a mix of commercial and soon-residential properties. The Paradise Valley Mall, opened in 1978, has been undergoing redevelopment since 2021, with at least two apartment projects underway.

A closer look at how this gets done 

Over the last decade, officials in Lynnwood, Wash., just north of Seattle, have reworked city regulations to encourage denser, mixed-use developments in and around their city center. The city’s Alderwood Mall, open for 43 years, is by all accounts still a thriving commercial hub.

But developers and the city saw the opportunity to convert part of the mall’s property into a significant residential property and the city’s land-use policies encouraged density. Back in 2021, on the site of a recently closed Sears, developers built Avalon Alderwood Place. It offers 328 apartment units on top of 64,000 square feet of commercial space.

“It is no secret that the face of retail is changing, and the property has done a great job evolving over the year,” Jerry Irwin, senior general manager of Alderwood, told the Lynnwood Times last year. “We were able to take a department store and transform it into an exciting and vibrant living community.” The key to this was having a City Council clear any unnecessary barriers to making this happen.

As a city planning document notes, the city’s land-use policy for the area read, “Development regulations for the Regional Growth Center should allow for the greatest residential density and building height allowed in Lynnwood. Maximum residential density and building height would be especially appropriate for development that includes affordable housing or that located residences above street-level retail.”

That sort of accommodating policy is how these projects get done.

Things don’t always go so smoothly

While large-scale conversions of malls will inevitably attract concerns over perennial issues like traffic, some mall conversions can be the focus of years-long political battles or subject to the heavy hand of local overregulation.

Case in point is Southern California’s Redlands Mall. Opened in 1977, the Redlands Mall spanned a 12-acre site in the city’s downtown area. Beginning in the 1990s and through the early 2000s, however, the mall began seeing declining sales and by 2010 was closed.

The vacant property passed from owner to owner through 2019. One major impediment owners and developers faced when figuring out how to put together plans for the property was city limits on what could be built. So, in 2020, the city put forward Measure G to exempt specified transit centers, including one including the mall, from slow-growth measures passed in the 70s, 80s and 90s, which regulate the height and density of residential buildings.

“The main rationale seems to be that the only way to get the downtown Redlands Mall, which has been empty for quite a number of years, the way only to get a developer interested in rebuilding or redoing it is by lifting the limits on the density of housing and the height limit in particular,” commented local journalist Cassie MacDuff in 2020.

The measure went down in defeat in March 2020, with nearly two-thirds of city residents siding with arguments appealing to maintaining the “character” of Redlands – a historic college town 60 miles east of Los Angeles in San Bernardino County.

Over the subsequent year and a half, four-fifths of the City Council were convinced to exclude the Redlands Mall site from development standards imposed by voter-approved Measure U in 1997. To get a flavor of the sort of “findings” contained in the measure: “Uncontrolled high density urban development will permanently alter the character of the City of Redlands and threaten the public health, safety and welfare by causing increased traffic congestion, associated air pollution, noise and higher crime rates.”

After further wrangling, downsizing plans, and legislation from the state nudging cities toward approving residential projects, the Redlands City Council finally approved a plan in 2022. “The new village, to be developed by Newport Beach-based Village Partners, would include five buildings containing up to 700 apartments and condominiums, more than 12,300 square feet of offices, and nearly 72,000-square-feet of mostly ground-floor shops and restaurants,” reported The Real Deal, a real estate website.

Cities should get with the program

City leaders confronted with the dual problems of a housing shortage and failing malls should embrace the chance to solve two problems at once. Rather than constrain economic opportunity and housing development, city plans should be accommodating and capable of adapting to shifting needs and realities. Fortunately, many cities across the country are doing just that.

Sal Rodriguez is opinion editor for the Southern California News Group and a senior fellow with the Pacific Research Institute. He is the author of Dynamism or Decay? Getting City Hall Out of the Way, published by the Pacific Research Institute.


Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.

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