For the past several years, you have probably seen empty retail space with for lease or sale signs in increasing frequency. Since the Great Recession and widespread adoption of online shopping, retail properties from suburban strip malls to substantial regional shopping centers have experienced a sharp decline in tenants.
Decline In Relevancy
Some once-vibrant commerce areas are becoming reminiscent of ghost towns, and retail estate owners often face sharp declines in the value of their property. Unable to continue with the status quo, many property owners and shopping center operators are attracted to creating more relevancy for their properties in a bid to lease out space and raise real estate values.
Lease Holder Shuffle
In a bid to preserve the ease of shopping at malls with a low tenancy rate, some property management companies are demanding that remaining tenants move closer together. This type of approach needs a legal consultation to ensure that it is feasible with the tenants’ lease agreements. Because of the logistical and contractual difficulties involved, many local concerns are looking at restructuring their properties altogether.
Reconfiguration Solutions
Innovative solutions often call for a flexible mindset and the teamwork of many different types of professionals. There have been many solutions to remodel and re-proportion empty retail space that include:
Creating outside entrances on mall stores
Making shopping centers that focus on a single theme, such as food or healthy living
Remodeling big box stores into more units, each with less square footage
Transformation Takes A Team
To transform large-scale redevelopment of major retail centers, it takes a team of commercial real estate professionals, business law attorneys, architects, city developers and more to:
Identify properties with potential for reconfiguration
Modify zoning if necessary
Secure funding for redevelopment
Untangle reciprocal easement agreements
Sailing Without An Anchor
Moving away from the traditional mall model that was anchored by major retailers in department stores, reconfigured malls now implement ways to stimulate traffic such as pop-up shops that change every eight weeks, and innovative brand offerings in smaller square footage spaces than before.
With the need to preserve value in retail properties, this trend will likely become a long-term proposition for property owners.