Converting malls into offices a new real estate agent niche as explained here.
Many Malls Closed Last Year with More Closing this year
Most blame online shopping for the demise of shopping malls.
CNBC News recently reported that “U.S. Malls See Tsunami of Store Closures Due to Falling Foot Traffic”. It’s so bad that CNBC claims U.S. retailers announced the closing of nearly 6,000 stores earlier this year. The reason comes down to falling foot traffic. Huge stores like Apple and Tesla can’t draw extra traffic any more.
Ever since August of 2018 foot traffic at the best shopping malls across America reports fewer mall visitors. Department stores took the biggest hit since then. For instance, Payless Shoe stores recently filed for bankruptcy. Include well-known stores like the Gap, Victoria’s Secret and Fred’s discount chain all closing mall across the country.
CNBC claims that shopping malls will turn to add apartment complexes, hotels, gyms, food circuses, and grocery stores to fill vacant promises.
Forbes recently published an article about how desperate malls are evolving into bringing in entertainment and events to cater to millennials and Gen Z’ers by giving them a better “experience” for their shopping pleasure.
Yet, this may not be enough to save existing malls.
Malls Closing in the U.S.
Business Insider reports that many shopping malls remain abandoned across America. They call it an “American Apocalypse”. The report also claims that international bank Credit Suisse estimates that up to 25% of all American malls will close due to the many individual store closures.
There’s even a website dedicated to “Dead Malls” in the U.S. They list 14 “dead malls” in California.
Converting Malls into Offices
Business Insider also pointed out an emerging new trend for abandoned shopping malls. Converting malls into offices. An example includes the Randall Park Mall in Cleveland shuttered since 2009. Amazon recently bought the empty mall to convert it into an 800,000 square foot “Fulfillment Center”.
Hawthorne Plaza in Hawthorne, California closed in 1999. Several movies used the spooky abandoned mall for blockbuster movie settings like Minority Report and The Fast and The Furious. The mall once contained its anchor store, JC Penney. Its 900,000 square foot space with a five-acre parking lot remains shuttered and covered in graffiti. In 2016, the city decided to demolish the mall to build a $500 million open-air complex of offices, housing, and stores.
The NY Times recently ran a story about abandoned malls converting into office complexes. They use the Westside Pavilion Mall in Los Angeles as an example of how a dying mall caught the attention of Los Angeles based developer Hudson Pacific Properties. They found Google looking for new office space in Los Angeles and proposed a 584,000 square foot office complex for Google. The mall will become “One Westside” when completed in 2022. The conversion costs expected at $410 million.
The NY Times claims this as a new trend to convert malls into office complexes. One benefit is those offices less risky than retail stores. The main beneficiaries include co-working businesses like WeWork providing shared workspaces for start-ups, freelancers, and entrepreneurs. The Jones Lang LaSalle global property company claims co-working spaces work best in converted malls nationally. They expect a growth of 25% annually through 2023.
The Times also points out that more malls converting into condominiums, apartments, and entertainment & sports venues. But, a “higher, better use” of abandoned and struggling malls involves repurposing the complex into offices.
Malls to Offices Revitalizes Communities
Los Angeles Mayor Eric Garcetti recently proclaimed that the Google office complex conversion will revitalize the area by converting a dormant space into a vibrant hub delivering good paying jobs. The tax boom alone makes this conversion more appealing to local governments than converting malls into housing complexes.
Christopher Calott, a University of California, Berkeley architecture professor predicts that commercial real estate venues generate more local property taxes than residential use.
In addition, the surrounding local communities favor offices more than malls because they open for fewer hours while generating less vehicle and foot traffic. Limiting usage to only peak hours in the day make offices less of a nuisance than malls.
Also, mall owners enjoy offices over retail and restaurants because office tenants make more money for landlords.
Total mall conversion to offices not necessary because office workers need to eat, shop, and mingle outside of the office. Leaving some retail, grocery stores, and restaurants catering to the office workers makes sense for everyone.
More office workers want to live and work near mass transit and city centers than commuting long distances. Workers want amenities near their office like bars, restaurants, gyms, and grocery stores. Converted malls provide these amenities.
Malls Converted to Offices Trend Continues
On a smaller scale, a developer converted a 140,000 square foot space on one floor into offices in the CambridgeSide Mall in Cambridge, Mass. It became a success as office space quickly filled up after interest from many potential tenants.
Struggling malls need to adjust to keep up with changing living and working habits throughout America. Workers don’t want to make long commutes twice a day anymore. They don’t want to drive long distances for dining and entertainment. Offering a converted mall with offices and amenities for the workers in the same complex appeals to developers, landlords, offices, and workers.
Commissions for Selling Malls
Think about brokering abandoned and struggling malls to high-end developers to convert the malls into office complexes.
Multi-million dollar sales means big commissions.
Creating a mall conversion agent niche opens doors for large commissions.
Want to Consider Other Agent Niches?
Look at our recent posts here to learn about other profitable real estate agent niches. We wrote about:
How to become a Probate Real Estate Agent. Here
Double Your Commissions with 1031 Exchanges. Here
How to become a real estate Investor’s Agent. Here
Earn Big Commissions Selling Franchises. Here
How to specialize in Selling Foreclosures. Here
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Steven Rich, MBA – Guest Blogger
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