It’s never too early to draft an adaptive reuse plan for a shopping center, even if a property is performing well. The retail market is evolving fast, and in five years, a change may be necessary to maintain profitability, according to experts on a recent ICSC Virtual Series episode called Challenges and Opportunities of Adaptive Reuse. “Look at your zoning, and if it’s only for regional retail, you’re in trouble,” said Sean Suder, a land use attorney at zoning consultant Calfee. “Start now, and figure out how to get more development rights on that property, whether you use them or not.”
Engage with the city early to see if they will support rezoning, recommended Terrence Maiden, CEO of Russell Glen, a development firm focused on urban projects and mall redevelopment. “Make sure you’re not hamstrung when it comes to reshaping these lots,” he said. For one mall redevelopment, Maiden courted municipal support to break up an oversized parking lot with a street grid.
Developers should have early conversations with city council leaders about their vision for the community, advised Bobby Boone, founder and chief strategist of &Access, a retail real estate consultancy that specializes in urban retail redevelopment. “The target should be remediating vacancy and blight.” He added that adaptive reuse is an opportunity for many retail developments to leverage back-of-house space. Particularly promising in urban areas: partial adaptive reuse for underutilized spaces.
City officials are becoming more accommodating about rezoning thanks to COVID-19, said Charlie Fraas, vice president of development for shopping center developer Casto. “There are so many communities where the economic development team and the planners haven’t worked together to understand you need more flexibility in these zonings. That’s changing.” Retail is gaining favor, as well, as municipalities realize how important shopping centers are to the tax coffers, Fraas said. “In the past, cities have wanted office and industrial that produces income taxes. Now, cities are feeling the impact of stores and restaurants closing.”
The full ICSC Connect Virtual Series episode is available here.