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Despite predictions of doom, strip malls live on

Strip malls are good places to provide personal-service businesses that neighborhoods need.

Stores in the Towne Square Mall in Paramus, N.J.
REUTERS/Mike Segar

For decades, it’s been the retail workhorse of the suburbs. Strung along a major road and anchored at one end or another by a supermarket or a drug store, with perhaps a pizzeria, bookstore, dry cleaner, hairdresser and other outlets sandwiched in between, the suburban strip mall gave easy access to customers who came by car. They could park in front of wherever they were going and dash in and out to do their business.

But in recent years, “neighborhood centers,” the more polite name for strip malls, seem to have fallen in popularity both with retailers and the public. A Canadian report suggested that 11 percent of the strip shopping centers in North America were derelict. Reis, Inc., a New York real estate research firm, reported that the U.S. vacancy rate in the first quarter of 2013 was a non-vibrant 10.6 percent.

Locally, the picture has been worse. The most recent report by Cushman Wakefield/NorthMarq, the Minneapolis-based real estate research and investment service, found that the vacancy rate last summer had bumped up slightly to 12.5 percent in the Twin Cities’ 306 strip malls. Business has improved since then, says Skip Melin, director of brokerage services for the company. The company’s next report won’t be out until July, but he expects that the post-recession market for neighborhood center space “will be crawling back to normalcy.”

Planning and real-estate honchos across the nation cite several reasons for the change. For starters, there’s too much retail space altogether. Brad Doremus, a senior analyst with Reis, says, “During the 2000s, strip malls were overbuilt to support housing communities that never took off. And a lot of strip malls will simply have to be demolished.”

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That’s already happening. Wayzata Bay Center, which featured several clothing stores, was torn down last April to make way for Promenade Wayzata, two five-story apartment buildings designed for senior living with ground-floor retail shops. “That’s a good example,” says Doremus. “You get rid of something you don’t need a lot of and replace it with something you do need a lot of.”  

Hot place for retailers

And right now, for whatever reason, the hot place for retailers is in cities, according to a 2013 report from ChainLinks Retail Advisors in “the higher income enclaves…and/or near employment hubs” where there’s a critical mass of customers milling about. The public also seems to have less appetite for shopping at the small malls — and the big ones, for that matter. The tasks of shlepping from mall to the other on congested roads, trolling for parking spots, and laying out a small fortune for a tankful of gas discourages customers — especially when they can order much of what they need over the Internet.

And, according to Edward McMahon, a senior resident fellow at the Urban Land Institute, people are willing to shop at a strip, “but no one wants to linger.” Small wonder. The bare parking tarmac, the often ugly signage, and drab box-like stores are uninviting, to say the least. Town centers and Main streets, where you only have to park once and then walk, he says, “provide a ‘place-making dividend’ that the homogeneous blur of the strip can’t match.” Consider the popularity of St. Louis Park’s West End or Grand Avenue in St. Paul where people can stroll and, if the weather cooperates, have a snack at a funky cafe while there.

No doubt about it, most strip malls are no more attractive than brown cardboard.  For evidence you can look at, a website that features discussions and photos of Minnesota malls gone downhill. And, with their lavish use of land for parking and one-story structures, the largest look ill-suited for a population that’s demanding more compact development and efficient use of land and energy.

If the strip malls — at least some — seem to be fading, “the question then becomes: What’s their next use?” says Sam Newberg, a real-estate research analyst.

Tom Borrup, principal of Creative Community Builders, consultants who help towns and cities “build strategies and plans that lead to vibrant and prosperous futures,” says that it all depends on where the development is and how it’s configured. But he can foresee reusing such malls for education the arts, and senior centers — “things that are a better fit with changing demographics and lifestyle patterns.”

Some offbeat ideas have come down the pike. The University of Alberta in Edmonton, Canada, sponsored an architectural competition last year to find ways to repurpose the strip mall. The winner was a team from the University of Buffalo School of Architecture and Urban Planning, which proposed giving the mall to local residents who would reuse all the building materials to construct houses of whatever size and shape they chose — a kind of up-market favela, as I see it. Another proposal reconstructed a mall from stacked shipping containers, which could be adapted quickly to new commercial uses as stores went in and out of business.

Costly and risky

Such drastic repurposing, however, is costly and risky. “It’s much easier to keep a strip retail and try to find new tenants,” says Newburg. And that for the most part is what landlords are doing. Out goes Blockbuster. In come blow-dry bars, thrift stores like Goodwill, and self-serve yogurt stores, says Melin. “Fitness operators are now taking bigger spaces, too,” he adds.

So despite predictions of doom, it seems as though strip malls will live on. After all, they still serve a purpose. You can order goods over the Internet; so you don’t need strip malls for that. But you can’t put your head into a disc drive and get a haircut or your abs into a 3D printer and expect muscles to develop. Strip malls are good places to provide personal-service businesses that neighborhoods need: manicurists, hair salons, yoga studios, even dental and medical offices.

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And strip malls’ relatively high vacancy rates could provide opportunities that previously didn’t exist. Says Thatcher Imboden, finance and development manager at the Ackerberg Group: “Landlords may lower rent to increase occupancy, which provides more affordable space that may be attractive to entrepreneurs or lower-margin businesses. In other cases, they may be converted to other uses, such as office space or day cares.”

Strip malls are unlikely to get any prettier, however. Few new ones are being built, and unless a landlord can attract a more upmarket tenant whose higher rent can defray the cost of renovations, we’re unlikely to see much improvement.