Is It True That Shopping Malls Are Being Transformed Into Apartments?
Yes, it is true that shopping malls are being transformed into apartments and mixed-use developments. This trend, often referred to as "mall repurposing," has emerged in response to the decline of traditional retail, the rise of e-commerce, and the growing demand for housing. Many malls, especially those struggling to retain tenants and foot traffic, are located in prime real estate areas, making them ideal for redevelopment into residential and mixed-use spaces.
The process typically involves converting these vast retail spaces into vibrant communities that include residential units, retail shops, offices, and community amenities. Developers often reuse portions of the mall’s existing structure to reduce costs and environmental impact. This repurposing strategy not only revitalizes underutilized spaces but also aligns with sustainability goals and modern urban planning needs.
Examples of successful mall conversions include The Arcade Providence in Rhode Island, which was transformed into micro-apartments, and Valley View Center in Dallas, which is being redeveloped into Midtown Dallas, a mixed-use urban hub.
Will This Trend Apply to Canada as Well?
Absolutely. Canada is already witnessing the trend of shopping malls being transformed into apartments and mixed-use developments. Several factors make Canada a prime candidate for this shift:
1. Urban Housing Shortages: Major Canadian cities like Toronto, Vancouver, and Montreal face severe housing shortages, and repurposing malls into residential spaces offers a creative solution.
2. Decline of Traditional Retail: Similar to trends seen in the U.S., Canadian malls have experienced declining foot traffic due to the rise of e-commerce. Anchor store closures, such as Sears Canada, have left many malls with significant vacant space.
3. Prime Real Estate Locations: Shopping malls in Canada are often located in central or suburban areas with excellent connectivity, making them ideal for residential redevelopment.
4. Sustainability and Community Revitalization: Repurposing existing structures aligns with Canada’s sustainability goals while revitalizing neighborhoods with new residential and community spaces.
Several mall redevelopment projects are already underway in Canada:
- Cloverdale Mall (Toronto): Being transformed into a mixed-use community with residential towers and green spaces.
- Oakridge Centre (Vancouver): A massive redevelopment project integrating residential, retail, and public park spaces.
- Westmount Mall (London): Transitioning from a traditional mall into a mixed-use residential and community hub.
- Brentwood Town Centre (Burnaby): Redeveloped as The Amazing Brentwood, a vibrant mixed-use urban space.
Given these developments, the trend is expected to grow in Canada as municipalities and developers collaborate to address housing shortages and revitalize aging commercial properties.
Which Public Companies Can Someone Invest in to Take Advantage of This Trend?
Investors can capitalize on the mall-to-apartment transformation by focusing on companies involved in real estate redevelopment, mixed-use projects, and construction. Here are some options:
1. Real Estate Investment Trusts (REITs)
REITs specializing in retail and mixed-use properties are at the forefront of mall redevelopment.
- RioCan REIT (TSX: REI.UN): One of Canada’s largest REITs, actively redeveloping malls into mixed-use communities (e.g., The Well in Toronto).
- SmartCentres REIT (TSX: SRU.UN): Transitioning from retail-focused properties to mixed-use urban hubs like Vaughan Metropolitan Centre.
- First Capital REIT (TSX: FCR.UN): Focused on intensifying urban retail locations with residential and commercial spaces.
- Simon Property Group (NYSE: SPG): A U.S.-based REIT with investments in premium malls and redevelopment initiatives.
2. Construction and Development Companies
These firms handle the physical redevelopment of malls.
- Brookfield Asset Management (TSX: BAM.A, NYSE: BAM): A global real estate developer with expertise in urban mixed-use projects.
- Allied Properties REIT (TSX: AP.UN): Specializes in mixed-use redevelopment projects.
3. Retail Companies with Real Estate Holdings
Retailers that own mall properties can sell or repurpose them for residential use.
- Hudson’s Bay Company (HBC): While private, its joint ventures (e.g., RioCan-HBC JV) are involved in redevelopment projects.
4. Construction Material and Infrastructure Companies
Firms supplying materials and services for redevelopment projects.
- Stantec Inc. (TSX: STN): Offers engineering and architectural services for large-scale redevelopments.
- Aecon Group Inc. (TSX: ARE): A Canadian leader in construction and infrastructure projects.
5. Tech Companies Supporting Urban Redevelopment
Real estate analytics and planning tools are critical for redevelopment projects.
- Altus Group (TSX: AIF): Provides real estate software and data services that support redevelopment planning.
6. Global Diversified REITs
International REITs with exposure to mixed-use mall redevelopment.
- Unibail-Rodamco-Westfield (Euronext: URW, OTC: UNBLF): Involved in redeveloping malls into urban mixed-use hubs in North America and Europe.
Conclusion
The transformation of shopping malls into apartments and mixed-use developments is a growing trend driven by changing consumer habits, the decline of traditional retail, and a pressing need for urban housing. This trend is already making waves in Canada, where housing shortages and underutilized mall properties create a perfect opportunity for redevelopment.
Investors can take advantage of this movement by focusing on REITs, construction firms, and companies specializing in urban redevelopment. With strategic investments, individuals can benefit from the revitalization of these prime real estate assets while contributing to the creation of sustainable and vibrant communities.
