Attention shoppers! If it feels like you're living in the mall, it may turn out that you do.
Retail centres are changing, turning into mixed-use locations with more offices, street-like walking areas and residential units. And Canada is no exception to a widespread movement to rethink the mall.
Across the country, mall makers and managers are redeveloping properties like mad. It's a change that's spurred by the sputtering out of big department stores, the popularity of online shopping and the preferences, particularly among millennials, to have "experiences" beyond just buying stuff and driving home.
It's happening a lot in the Toronto and Vancouver areas, but not just there. On Vancouver Island in Saanich, B.C., for example, a shopping centre called Uptown is being redeveloped into, well, an uptown.
The 18-acre site, being developed by Morguard Investments Ltd., is being rebuilt from an enclosed mall into a neighbourhood. The first two phases consist of 875,000 square feet of retail and office space, with a final phase that includes rental suites and townhomes.
The project includes a Whole Foods store, 225 bike racks, changing rooms and commuter showers for mall employees who ride to work. At least some of its buildings are being designed to a LEED gold standard.
"Malls are in a constant state of evolution," says James Smerdon, vice-president and director of retail consulting at Colliers International in Vancouver.
"More so than any other land use, retail spaces are reinvested in, rebuilt, remodelled, or somehow reinvented, on a regular basis," he says.
In Colliers's National Retail Report for Canada, issued last spring, he predicted that every single one of Canada's suburban malls will undergo a "fundamental structural change" in the next decade.
Mall owners are "reacting to competition, adapting to a revolving door of local and international tenants, and trying to maintain the interest of consumers who have a near-infinite range of ways and places to spend their money," Mr. Smerdon says.
Some of the more creative conversions he has seen include the building of apartments atop a mall parking garage in Richmond, B.C., and vacant units in U.S. malls being filled with labs and gaming halls, along with new apartments.
Adding housing to retail mall space is compelling because it brings shoppers either literally under the roof or close enough, says Russell Whitehead, a planning consultant at Colliers in Vancouver. He points to an interesting mall conversion in Providence, R.I.
"The retail units in an old, failing shopping centre were converted into 48 attractive micro apartments with 17 boutique retailers that primarily serve as an amenity to residents living within the complex," he says.
Smaller malls and those that have grown tired will be redeveloped more extensively than larger retail spaces that are holding their own or thriving, says Avis Devine, associate professor of real estate and infrastructure at York University's Schulich School of Business in Toronto.
"The class A malls like the Eaton Centre [in Toronto] are not going to go away. They might get intensified and look different than what we're used to, though," she says.
Nevertheless, "in the global context, Canada is a leader," Mr. Smerdon says.
"While mixed-use developments are not new, and some European and U.S. examples are arguably more innovative, Canada really embraced the enclosed mall in the seventies and eighties, and now we have hundreds and hundreds of them occupying thousands of acres of valuable land.
"They're surrounded by roads, neighbourhoods, transit, cultural venues and other elements of good town centres. It's happening slower in Canada than it could because of the more conservative development financing environment here in the U.S., but some of the projects we're seeing here will be global examples for a generation."
Mr. Smerdon says that the movement to remake malls has been accelerated by the closing of major retail tenants in recent years. In 2015, Target Corp. shuttered all of its Canadian stores, leaving about 15 million square feet of retail space (and another five million in office and warehouse space) vacant at more than 130 locations, ranging from 80,000 to 125,000 square feet each.
According to research from real estate service CBRE, more than 40 per cent of the old Target space is still vacant.
More recently, in October, Sears Canada pulled the plug on its business, liquidating 131 stores and leaving nearly another 15 million square feet empty.
Mr. Smerdon compares the closing of these anchor tenant businesses for landlords to the stages of grief people go through when a loved one dies.
After exhausting their searches for suitable grocers or fitness centres as replacements, circumstances are forcing property owners to change their vision, he says.
"Once they reach the 'acceptance' stage of grief, they start looking to carve up large spaces to accommodate smaller retailers, restaurants, other uses and then to demolition and redevelopment."
The rise of online shopping is changing the way people interact with malls, too, Dr. Devine says.
"Retailing is far more experiential now. We're seeing the impact of 'web-rooming' and 'showrooming,'" she explains.
"Showrooming is when you go to a store and look at something and then buy it online. Webrooming is the opposite [shoppers see something online and buy it at the mall]," she says.
The changing tastes of modern urban dwellers is changing peoples' relationship with malls as well, Mr. Whitehead at Colliers says.
"In general, there is strong demand for residential units in convenient locations where residents can live, work, and play, all in a
walkable community close to public transportation. Although millennials contribute to this demand, other age groups also like this form of development," he explains.
It will take time for the changes in malls to percolate through society and our culture, because real estate projects take a long time to get from conception to completion, Dr. Devine says. But wait till you see what happens in 10 or 20 years.