Well before the pandemic battered an already stress-fatigued retail property industry, developers were investing millions to recast well-located shopping centers into other uses and community assets. But that doesn’t mean retail and retail real estate are going away. Those new uses then will attract retail.

Some conversions have been delayed by COVID-19 challenges, and financing has become challenging for some center remakes, said developer Frank Mihalopoulos, founder of Corinth Properties. "If a project is even associated with a retail development, it can be a nonstarter with some lenders."

But many conversions remain a go. Prominent among these is transformation of West Los Angeles’ Westside Pavilion mall in into a 584,000-square-foot headquarters space called One Westside. The $550 million redevelopment includes demolition of the three-story interior and construction of a Google campus around the center's steel skeleton. The project is on pace for first-quarter 2022 completion, according to developer-operator Hudson Pacific Properties, which owns 75 percent of the joint venture. Macerich owns the balance.

The partners retain 96,000 square feet of retail space, including the 12-screen Landmark Theatre, in a separate retail building. "The fact that Google is taking all available creative office space in this joint project with Hudson Pacific underscores the power of our well-placed real estate," Macerich CEO Tom O’Hern said in a Nov. 5 statement. Google's 14-year lease will begin when construction is complete.

The development is sure to spur nearby retail, restaurant and office deals, leasing officials close to the deal said. Already, GPI is redeveloping a neighboring former Macy's into offices in a $180 million project called West End.

And Tulsa’s former Eastland Mall, which opened in 1984 but died off about a decade later, has been converted into a 1 million-square-foot mega office park called Eastgate Metroplex, hosting thousands of office workers. Tenants include Coca-Cola, Capital One, Enterprise Rent-A-Car and sister companies National Car Rental and Alamo.

In Birmingham, Alabama, Arlington Properties is joining Colliers | Alabama for a mixed-use redevelopment of the struggling 750,000-square-foot, 46-year-old Brookwood Village mall. Eateries, hotels, residences, retail and green spaces will be featured, the partners said in October.  Since March, COVID restrictions accelerated the exodus of Jason’s Deli, Cocina Superior, Brio Tuscan Grille and anchor Books-a-Million, developers said. Another anchor, Belk, closed in 2018.

The Brookwood redevelopment objective, said Arlington Properties executive vice president of development Mark Stuermann, is to make it "a destination not just for our generation but for the next generation, so in 50 years, you don't have to redevelop it again." The project is expected to be finished in 2022.

Of the roughly 1,500 enclosed malls built across the U.S. since 1956, about 1,000 continue to be used for their original purposes and about 500 have been changed to different uses, according to 2019 research by urbanist Ellen Dunham-Jones, director of the Master of Science in Urban Design degree at Georgia Tech. About 120 of those 1,000 are slated to be redeveloped for uses like distribution and industrial centers, sports facilities, movie stages and data centers, Dunham-Jones' research indicated. Office uses, ranging from call centers to high-tech spaces, were the primary reuse through 2019, while educational, residential and medical entities also were prominent, according to Dunham-Jones. Because indoor malls have expansive floor spaces, lofty ceilings, lots of natural atrium lighting, abundant parking and central locales, they can be ideal sites for all types of developments, she said.

Heading into 2021, the three most popular mall reuses are likely to be multifamily housing, fulfillment centers and “last-mile” delivery/pickup hubs for online retailers, said property attorney Matthew Pisciotta, a partner at Nelson Mullins. Given upticks in U.S. housing demand in parts of Florida and elsewhere, conversions of malls to market-rate multifamily may be the most profitable developer strategy at present, he added. "Developers may also explore converting mall spaces into senior or affordable housing to take advantage of longer-term trends."

Churches have been buying all or portions of shopping centers for decades, including Southland Christian Church's purchase of the former Lexington Mall in Kentucky. The mall was a community eyesore before Southland bought it a decade ago then resurrected it as its third campus in 2013.

Schools also are overtaking entire shopping centers, including Austin, Texas' former Highland Mall. Austin Community College bought the center last decade, and the resultant campus remains a national model for adaptive reuse.

And not all retail conversions are nonretail. In October, Gallatin Mall Group announced a partnership with two firms to create a diverse mix of retail, entertainment and public gathering spaces at the 365,000-square-foot, four-decade-old Gallatin Valley Mall in Bozeman, Montana. The redevelopment will include the state's first Whole Foods, which plans to break ground in spring 2021.

Industrial Conversions

For three years starting in 2016, 24 retail-to-industrial conversions were completed, totaling 10.9 million square feet of new industrial space, according to a January 2019, report from CBRE called Trading Places: Retail Properties Converted to Industrial Use.

Such conversions typically occur in markets with below-average median household incomes, an indication of slowing retail consumption, but where industrial vacancies are below 5 percent, the report said. Most targeted buildings already offer dock doors and other features compatible with industrial needs, CBRE said.

Two such projects occurred in the past six years in Arlington, Texas, near the city's General Motors assembly plant. One is the industrial redevelopment of the 1.4 million-square-foot Six Flags Mall, which was bulldozed in 2017 and replaced largely by tenants serving GM. About two miles away, the former Forum 303 Mall was replaced by a 70-acre business park featuring warehouse, office and flex-tech operations.

Amazon has added millions of square feet of fulfillment space in former retail buildings from 2019 to the present. It opened a 650,000-square-foot fulfillment center in late 2019 at Ohio’s former Euclid Square Mall, which closed in 2016. In 2020, it added another Ohio facility, a 700,000-square-foot fulfillment facility at Akron's defunct Rolling Acres Mall, which closed in 2013. In February, Amazon bought the 119-acre Old Chicago indoor amusement park/mall in Bolingbrook just south of Interstate 55 for what a spokesperson said are "network needs." Based on similar purchases, that could mean logistics. Amazon paid $50.5 million for the land, last used for vehicle auctions.

Healthcare Anchors

In Dallas, a landmark medical redevelopment at the once-dormant, 45-year-old RedBird Mall is bringing three major healthcare providers to the heart of a longtime healthcare desert. Locally based Parkland Memorial Hospital is partnering with pediatric provider Children’s Health to take a large block of space, while UTSouthwestern Medical Center has signed a separate deal. The three will occupy 200,000 square feet of clinics and offices by 2021.

RELATED: See how Terrence Maiden transformed RedBird Mall

And new retail and other uses are joining the party. This year, a 20,000-square-foot Foot Locker Power Store has joined a two-year-old Starbucks Community Store concept at the reinvigorated center, which is converting to a partially open-air format. The UT Southwestern/Children's Health lease supplants a 150,000-square-foot Sears while Parkland Memorial is taking 43,000 square feet of a defunct Dillard’s. The Dallas Business Journal named the $157 million Reimagine RedBird project its 2019 Deal of the Year.

While COVID-19 has delayed a planned Courtyard by Marriott hotel at RedBird, a 300-unit residential complex from Palladium USA is now under construction. Customer service outsourcer Chime Solutions also has a call center there.

"We're not just fixing the mall; we're repurposing it," said Mihalopoulos, whose Corinth Properties similarly ushered medical anchors to struggling malls in Nashville and Atlanta. "These deals require a lot of heavy lifting and patience, so you can't do them everywhere, but when the numbers work, it's a great way to fill a need, reuse real estate and control occupancy costs. Plus, it's much cheaper than building new."

In Atlanta, a medical conversion — by Corinth offshoot ATR Corinth Partners and its developer, Tony Ruggeri — is underway. A 224,000-square-foot lease by Emory Healthcare and an office lease will occupy more than a quarter of the 1 million-square-foot Northlake mall. Emory will centralize more than 1,600 employees there in two phases ending in 2022, it said. Construction is underway while the Macy's anchor remains open. Already operating is a 50,000-square-foot office hub for Chime Solutions.

Mihalopoulos was also an investor/developer in the 2008 remake of the now-52-year-old One Hundred Oaks Mall in Nashville into a mixed-use medical center for Vanderbilt University Medical Center. The 900,000-square-foot project is an even split between retail and Vanderbilt's medical clinics and offices. Retail sales doubled soon after Vanderbilt came aboard, Mihalopoulos said. The retail roster of discounters — including Burlington, T.J.Maxx, Ross Dress for Less and Michaels — has weathered COVID-19 well, he added.

In Phoenix, the former Park Central Shopping City, built in 1957, is being transformed into a nine-story, mixed-use development anchored by a 180,000-square-foot, $100 million health sciences campus and medical school for Creighton University. It’s pegged for an April completion. A 207-room dual-branded Home2 Suites and Tru by Hilton hotel is under construction, and a 278-unit Aspire Park Central apartment complex, an arts center, and offices are slated there. Plaza and development partner Holualoa Cos. renamed the public-private development Park Central.

Recreational Centers

Recreational redevelopments face uncertainties. Hazelwood, Missouri’s 160-acre Powerplex project, a conversion of the moribund St. Louis Outlet Mall into a national youth sports complex designed to host 180-plus tournaments and events annually, was ramping up toward a full 2021 opening when the pandemic struck. Since then, practice and league play have been limited for the new volleyball, softball and baseball facilities, and the complex is seeking added funding to move forward, local media reports say.

In a March interview with SCT, Powerplex developer Dan Buck, managing partner of Big Sports Properties, said additional spaces for basketball, hockey, beach volleyball, dance, cheerleading, lacrosse, field hockey, pickle ball and wrestling were expected to deliver in 2021. About a dozen sports-focused retail shops, several hotels and 13 restaurants are also slated for Powerplex, while a cinema, a go-kart track, a miniature golf course, an ice rink, a bowling facility and other attractions were also expected, Buck said. "We're turning a community liability into a huge community asset," he said at the time. Big Sports officials did not respond to requests for updates on the project.

The complex replaces an outlet mall that was just 8 percent occupied. One holdover from the outlet center, Cabela's, has been drawing 400,000 guests annually, Buck said. Since COVID-19, Powerplex has hosted several socially distanced events, including concerts, drive-in movies and graduations.

Residential Uses

The residential remake of the historic The Arcade Providence in Rhode Island, considered the nation’s oldest indoor mall before it closed in 2008, is a prime example. Two of the downtown center's three floors were converted into microloft apartments for the 2013 reopening. The 48 housing units on the top two floors became so popular that the waiting list for spaces, which are as small as 225 square feet, reached the 4,000 mark at one point, said owner/developer Evan Granoff. Some units have been converted to condos. The Arcade's first-floor retail includes restaurants, boutiques and such offerings as a coffee shop/whiskey bar. Constructed in 1828, the building features columns, granite walls and a facade that largely have withstood the test of time.

About 25 miles north of Chicago, Northbrook Court mall is partially converting to residential use; Ryan is supplanting a Macy’s that closed last year with 315 apartments. Plans for a new grocery and a Great Lawn element circled by restaurants and retail are in the works. An existing retail wing will remain.

Parts of the former Collin Creek Mall, in Plano, just north of Dallas, have been demolished to make way for a $1 billion redevelopment named Collin Creek. It will include 3,500 living units, as well as offices, restaurants, retail and nine acres of parks, according to owner Centurion American Development Group. A sky-lit atrium of the 37-year-old mall will remain as a “grand paseo” for the new retail centerpiece, developers said.

It remains to be seen what the continuing impact of COVID-19 will have on uses like gyms, temporary workspaces and event venues, said Pisciotta. For now, wary redevelopers may limit restaurant and event-space starts "in favor of more residential units and potentially more open space," he said.

Mihalopoulos said the creative and well-thought-out revivals of America's malls will keep such properties viable and on the tax rolls and attract nearby retail and eateries to support them. "We are bringing in traffic generators that will continue to help transform these areas."