Turning a tiny fraction of America's dead strip malls into housing could create 700,000 new apartments

• Old or vacant strip malls offer a promising opportunity to create much-needed new housing.
• A new report found that converting 10% of strip malls into housing could create 700,000 new homes.

You've likely heard the US is in the midst of a retail apocalypse. The rise of e-commerce has pushed big box stores into bankruptcy and helped create "zombie" malls across the country. It doesn't look like the trend will reverse itself anytime soon.

At the same time, communities across the country are facing a housing affordability crisis driven by a shortage of homes. Urban planners and developers across the country are pushing a fix for both: converting strip malls into housing.

If just 10% of vacant strip malls best-suited for redevelopment were turned into housing, it could create more than 700,000 homes, a new report from housing nonprofit Enterprise Community Partners found. That estimate assumes half of that new housing would be lower-density multi-family housing and half would be medium-density multi-family buildings of up to six stories.

Opportunities for brick-and-mortar retail conversions are everywhere in both cities and suburbs, Ahmad Abu-Khalaf, a senior research analyst at the housing organization and the report's author, told Insider. There is 947.5 million square feet of strip mall space across the US, according to the International Council of Shopping Centers, the report notes.

"Most jurisdictions have at least a couple of dated strip mall properties that are underutilized and could be redeveloped into housing and affordable housing, or mixed-use developments that have both affordable housing and community-serving spaces," Abu-Khalaf said.

Turning commercial buildings into homes is nothing new. Cities across the country have transformed underused or vacant offices and manufacturing space into apartments and condos. Many are increasingly looking to repurpose offices as workers settle into hybrid or fully remote schedules in the wake of the pandemic. The White House also recently weighed in, announcing new funding and technical assistance for office-to-residential conversions, particularly near mass transit stations.

Building conversions are notoriously expensive and sometimes practically infeasible. Without land-use policy updates, tax incentives, and other regulatory changes, many just aren't possible.

But when it comes to strip mall conversions, finding the right property to redevelop is the bigger challenge. Strip malls are often zoned exclusively for commercial uses, so conversion projects might require zoning changes, local community support, and the support of any existing tenants, Abu-Khalaf said.

And financing a conversion project often isn't straightforward. Developers generally need to cobble together funding from various government programs, including the low-income housing tax credit and Community Development Block Grants.

Not only a housing strategy

Aside from creating much-needed new housing, strip mall redevelopments can reinvigorate existing businesses by bringing in new customers, create more walkable, mixed-use neighborhoods, and offer more green space by turning underutilized commercial space or parking lots into public parks.

"It's not only housing strategy, but you can add the economic development lens, the urbanism lens by making it more pedestrian-friendly and walkable and accessible by transit," Abu-Khalaf said.

The process of converting the malls into housing is often less complex than transforming urban office buildings into homes. Demolishing a single-story strip mall is easier than rebuilding a downtown high-rise. And older strip malls are often costlier to maintain than to tear down and redevelop.

Cities and suburbs across the country are already seeing success turning malls into housing. The report points to two examples: a gas station and strip mall conversion into affordable housing in Santa Ana, California and the transformation of a Sears department store into senior housing in Irondequoit, New York. Both projects took advantage of state and local tax credits and subsidies.