Housing on mall properties continues to grow in popularity

More Americans are living on mall properties as real estate developers knock down department stores and put up apartment buildings in their place.

At least 192 U.S. malls planned to add housing to their footprint as of January 2022, and at least 33 had constructed apartments since the pandemic began, according to a Bloomberg report. The multifamily housing trend helps to alleviate the housing shortage and bring residents close to retail and restaurant businesses that are hanging on within struggling malls.

Some developers are razing department stores like Macy’s or JCPenney and using the spaces and their parking lots to put up apartment buildings. In rarer cases, some have built apartments inside of shuttered storefronts or gutted them to make way for a multi-use mix of housing, retail, restaurants, outdoor spaces, and entertainment venues.

The fastest growing use of repurposed mall spaces is apartment complexes. Other uses include Amazon distribution centers and pickleball courts. Top-tier malls continue to be in high demand, but nearly 34 million sf of U.S. mall space is vacant and off the market, Bloomberg reported.

The challenges to mall-based housing development include restrictive zoning laws and antiquated lease agreements. In addition, the shape of a typical mall and department store is usually not conducive to housing.