Old Malls Need More Than Apartments
Old malls have a clear problem. Many were built for a different time. The fix sounds simple — turn the mall into a mixed-use site. But the drawings look better than the results. This issue shows one plan stuck in San Francisco, one project that worked in Colorado, and what separates them.
They were made for big department stores, large parking lots, and long shopping trips. But shopping habits changed. Some stores closed. Some brands moved online. Some malls lost traffic and never got it back.
So owners looked for a new plan. Turn the mall into a mixed-use site. Add homes, shops, parks, food, offices, hotels, or medical space. Make it feel like a small town center instead of an old shopping box.
That idea can work. But it is not easy.
Why This Is Happening
Many malls sit on large pieces of land. That land may be in good suburbs, near roads, transit, and homes. Even if the mall is weak, the land can still be valuable.
This is why mall sites attract developers. They are often large enough to build something new without needing to buy many small lots.
But turning a mall into a real district takes more than adding apartments. People need a reason to go there. They need food, green space, services, safe streets, and places to gather.
A good mixed-use plan must feel like a real place. If it only feels like apartments next to an old mall, the project may fall flat.
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What Others Miss
The biggest mistake is thinking mall land is easy to fix because it is large.
Large sites are useful, but they are also hard. They need major planning. They need roads, water, power, parking, public space, and many phases of work.
Old leases can also make things hard. Some stores may still have rights that slow the plan. Some anchors may own their own boxes. Some sites may need years of talks before work can start.
The cost is another issue. A mall redo can take a lot of money before the first new tenant moves in. If rates are high or lenders are cautious, the project may slow down.
Brookfield's plan for Stonestown Galleria in San Francisco shows what this looks like. The developer wants to turn a 29-acre parking lot into 3,500 homes, plus a six-acre park and more retail. The plan has been in the works since 2021. Ground has not been broken.
That is why some mall plans look great in drawings but take years to happen.
What This Signals for Investors
Investors should focus on whether the site can become a true daily-use place.
A good mall redo should not rely only on shopping. It should add homes, food, services, health care, green space, and places people want to visit often.
The best sites may be in areas with strong incomes, growing housing demand, and limited land. If the surrounding area is weak, the project may need more support and more time.
The phasing plan matters too. A smart owner does not need to fix the whole mall at once. They can start with one part, prove demand, and then keep building.
That lowers risk. It also helps the site feel alive while the full plan is still being built.
The Belmar district in Lakewood, Colorado, is a useful benchmark. It replaced the failed Villa Italia Mall with 900,000 square feet of retail, 1,300 homes, and a full street grid. The project took close to $1 billion and several years, but it now functions as the city's downtown. That is the standard a serious mall plan should be measured against.
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By the Numbers
Brookfield's 2018 plan to convert 125 malls into mixed-use mini-cities is the clearest test of the model. Six years in, only two redevelopments are complete. The firm has sold or returned 24 malls to lenders and may shed up to 16 more, according to Wall Street Journal reporting.
Simon Property Group is moving differently. The mall REIT has more than $1 billion in active construction and another $1 billion set to break ground in 2026, with $3 billion in future redevelopment in the pipeline.
About 46% of mall redevelopments are now mixed-use, per Capital One Shopping research. But mall vacancy hit 8.8% in Q1 2026, and Class C malls — the most likely conversion targets — sit at 13.3%. Closed malls stay empty for nearly four years on average before a new use takes hold.
The idea is not broken. The easy version of it is.
Bottom Line
Old malls can become useful again, but apartments alone are not enough.
The best mall redevelopments create a real place. People can live there, eat there, walk there, shop there, and use services there.
For investors, the lesson is clear. Do not buy the drawing. Study the plan. A mall site only works when it becomes part of daily life again.
