Would you like to see your local shopping mall converted into:
- Don't change it - I love malls and I think they're here to stay. (38%, 15 Votes)
- Offices; (23%, 9 Votes)
- Condominiums; (21%, 8 Votes)
- A hospital; or (18%, 7 Votes)
Total Voters: 39
Still not sure what to do with vacant retail space? Turn it into something else!
Shopping centers have been one of the hardest hit properties in the commercial real estate sector, as the Great Recession triggered less consumer spending even as online retailers continued to gobble up market share. This has resulted in increased vacancies and even entirely vacant shopping centers, blighting communities and weighing down investment portfolios.
Nationwide, the retail vacancy rate was 9.7% at the end of the fourth quarter of 2011, according to Marcus & Millichap.
The retail vacancy rate varies across the Golden State, with the 4th quarter of 2011 showing:
- Los Angeles at 6.3%;
- San Diego at 4.7%;
- Orange County at 6.8%; and
- Riverside at 11.4%, according to Marcus & Millichap.
Of the ten U.S. markets expected to have the lowest retail vacancy rate in 2012, five of those markets are in California. However, real estate is local, and regions struggling economically (such as Riverside County) will still experience high retail vacancies.
Some gaze at shadowy, empty shopping malls, echoing with the ghosts of mall-walkers and the stale smells of the food court, and see an opportunity. These entrepreneurs tweak retail spaces to open offices, hospitals, schools and even condominiums.
first tuesday take: Creativity is the personal ability of a broker or agent to move beyond traditional bounds of standard activities and envision something transformed, the antithesis of conservative, customary thinking. While leasing agents are better known for swift closings than innovative artistry, we know you have it in you.
Leasing agents in the commercial market: when enlisted by a property owner to fill a vacancy, consider offering new ideas for the use of the space. If you broaden your marketing to promote use of the space beyond what it was originally built for, you reach more potential tenants or buyers. Consider which producers of goods and services are surviving and taking off in your community and see if you can match up these industries with vacant retail space. Existing tenants may be your best source of a tenant for that vacant space, and strip malls need not always be what they were.
Further, with the popularity of online shopping, retail is unlikely to rebound to its previous strength. Thus, converting vacant retail space is a good investment in long-term sustainability.
One thing to remember before you are swept away by the creativity bandwagon: when adapting a space, be sure the new space’s function conforms to local zoning laws, or that permits are otherwise available for the use.
The effect local city planners and zoning committees have on real estate is profound, and if outdated or unreasonable zoning laws prevent you from transforming a space, do not hesitate to push for change. Speak with business owners in your area, as they should support efforts for zoning changes to attract more profitable types of businesses. Alternatively, (though less preferable as it does not fix the larger problem of overly strict zoning) you may apply for a variance or conditional use permit from the zoning (or planning) commission if an ordinance change is politically unlikely.