Major department stores in the U.S., such as Macy’s and JC Penny, are increasingly disappearing and shutting down across the country. A few months ago, Macy’s announced plans to close 150 'inefficient' stores within three years, hoping to regain stability after a bleak performance in 2024. This year, they are set to close 66 department stores and outlets, including in populous areas like New York City and Los Angeles.
Several factors contribute to U.S. large shopping malls no longer being favored by customers, including changes in shopping consumption patterns after the pandemic, where many people shop online directly, as well as frequent security crises with robbery incidents, customers stealing merchandise, difficulty in hiring staff, and high rent.
Real estate developers are focusing on these 'developed' cases, transforming them into new projects such as building new homes on vacant lots next to shopping centers and revitalizing old department store spaces to boost real estate investment confidence. This article introduces a CNBC interview video to see how Americans are turning abandoned department store spaces into housing.
Revitalizing abandoned department store ruins into mixed-use shared spaces
According to data from Investment Property Exchange Services, up to 68% of Americans live near abandoned department stores. Many large department stores have turned into ruins, and now real estate developers have discovered a new solution to the vacancy problem by transforming idle abandoned department store spaces into small rental homes. This can solve the vacancy issue, ensuring existing spaces are fully utilized, while also addressing the high rental cost problem, providing various affordable rental options for single, low-to-middle-income individuals.
Real estate developers are revitalizing large department stores and parking lot spaces, planning to develop residential properties that allow the public to live in department stores. As of January 2022, at least 192 abandoned shopping centers are planned for residential development inside and next to department stores, including locations in California, Colorado, Florida, Arizona, and Texas. This not only helps alleviate the housing shortage in the United States but also makes it more convenient for people to shop and dine at the same time.
What does it feel like to live in a department store?
Department stores are partitioning unleased retail spaces into small rooms to attract tenants. People who enjoy shopping in department stores should love living in them, as they can stroll around and check out new merchandise every day. CNBC reporters specifically visited the development project at Flatiron Crossing shopping center in Colorado and the Arcade shopping center project in Providence, Rhode Island, to understand what it feels like to live in a shopping center. Tenants expressed that living in a department store is a great experience, as they can get their hair cut at an in-mall salon, listen to author talks at the bookstore, and while rooms cannot have stoves, there are cafes and snacks available for meals. Tenants living above the mall can maintain privacy by closing the blinds. Another benefit of living in a mall is the close proximity to crowds, ensuring single individuals do not feel lonely and can enjoy the liveliness brought by the people.
Many real estate investors are now seeing opportunities and placing their investment targets on properties within department stores, which can be rented out for personal use or as Airbnb. Taiwan has many abandoned buildings and mosquito museums, which can learn from the American approach to provide more affordable rental housing for the general public, and even more environmentally friendly, utilizing already developed land and spaces, allowing for quick move-in without a long wait.
This article discusses how the United States is revitalizing abandoned department store spaces, transforming them into affordable small rental homes, first appearing in Chain News ABMedia.