By Sara B. Hansen / NewsBreak Denver
(Denver, Colo.) With three shopping destinations poised to undergo significant renovations to add housing and reduce retail space, the Denver metro is part of a national trend to convert traditional shopping centers into multi-use properties.
The change illustrates the convenience of living, working, and playing in one area, says Stephanie Cegielski, vice president of research and public relations for the International Council of Shopping Centers.
“It’s not an online vs. in-store shopping battle,” Cegielski said. “Before the pandemic, human beings were very social people, and now we’re seeing that need to have the interaction of shopping in person return.”
During the past 20 months, shopping has continued to evolve, with people shopping in-store or online and picking up items at stores.
“That’s not likely to change, but in the next five years, we will see the continued evolution of shopping malls,” Cegielski said.
The increasing need for housing in major metro areas is driving the change.
David Garcia, policy director at the Terner Center for Housing Innovation at the University of California at Berkeley, told the Denver Post converting former mall space into housing is an “emerging trend” in urban areas.
“There is such a demand for housing,” Garcia said. “It follows the trend of trying to put existing land to the highest and best use.”
Littleton City Council voted 4-3 in early December to allow California-based Gerrity Group to cut retail space to provide room to build housing. BusinessDen reported Gerrity Group could trim existing retail space from 270,000 square feet to 125,000 square feet to add 2,000 residential units.
Councilmember Scott Melin said although he favors projects that blend housing with retail, he worries the proposal would cut the amount of sales tax the mall generates.
BusinessDen previously reported the mall generated sales tax revenue of over $2.5 million annually in 2007. Materials prepared by Littleton city staff for the December meeting showed sales taxes trended down before plunging to $1.5 million during the pandemic. City staff estimated redeveloping the property could increase sales tax revenue to $2.34 million.
Without making changes, the mall’s sales tax revenue would continue to decline to about $900,000 per year, BusinessDen reported.
Gerrity Group’s plans indicate redevelopment will make the mall, including tenants Apple, Alamo Theater & Drafthouse, Pottery Barn, and Tattered Cover bookstore, easier to navigate. In addition to building “a diversity of housing options” for various ages and income levels, the redevelopment also could include a hotel.
Cherry Creek West
East West Partners, a Denver development company, plans to spend $1 billion redeveloping about 13 acres near Cherry Creek Shopping Center into a mix of housing and office space.
The east side will remain a traditional shopping mall with about 160 stores and 40 restaurants. Stores include Le Creuset, The North Face, the Apple Store, Louis Vuitton, and Neiman Marcus.
The west side, which has been mostly vacant for several years, has more of a big-box feel, BusinessDen reported.
East West Partners plans to demolish those structures and replace them with a possible layout that would include seven buildings, parking, and a large grassy lawn surrounded by walkways.
Amy Cara, Denver’s managing partner for East West Partners, told The Denver Post that the site, called Cherry Creek West, hasn’t met its potential.
“This is a site we’ve had a lot of interest in because it’s really the gateway to Cherry Creek,” Cara said.
The Streets at SouthGlenn
In mid-December, Centennial City Council approved a plan to complete the transformation of the former SouthGlenn Mall.
Council members approved a plan to allow The Streets at SouthGlenn to increase the maximum number of housing units to 1,125 from 350 while cutting the amount of retail space from 90,000 square feet to 621,000 square feet at the 77-acre outdoor shopping district.
Developers will build new housing primarily on space formerly occupied by a closed Sears store and a Macy's that will close in March.
The shopping center, owned by Denver-based Alberta Development Partners, generates about $3 million in sales tax, Neil Marciniak, Centennial's economic development director, told the Post.
Don Provost, founding at Alberta Development Partners, told the Post the SouthGlenn reconfiguration is needed in a retail environment where consumers continue moving their dollars online.
Alberta paid $10 million in 2018 for the Macy's property, while Northwood Investors bought the Sears building in 2017 as part of a $15 million deal, The Post reported.
Construction on the new apartment buildings could begin in late 2022 and open in 2023 or 2024.
Meeting a national need
In Dallas, developers have transformed the 46-year-old Red Bird Mall into a $200 million mixed-use center in six years.
The new RedBird is a 95-acre project that will include housing, hotel rooms, office space, restaurants, and shops.
Redeveloping retail space to provide more housing fits with state lawmakers’ plans to create incentives for developers and local governments statewide in 2022 to promote more affordable housing by prioritizing dense, multi-family developments.
The Denver Post reported that Colorado home prices skyrocketed by at least 457% in the past three decades.
Legislators can’t abolish single-family zoning, but they can encourage change. They plan to do so by setting aside 10% of the $4 billion the state received in federal stimulus money.
Deciding to revamp some of Colorado's prime shopping destinations makes sense Cegielski said.
"Any piece of real estate needs to respond to what the community needs. These are big plots of land that are conducive to creating housing and parking."
She anticipates similar changes will happen at other Colorado shopping centers.
"I'm pleased to see Colorado once again being forward thinking about how to best use these properties," Cegielski said.
"It's good real estate to provide what the community needs and, in this case, the demand is there for more housing and more retail."