While the “retail apocalypse” became a common chorus pre-pandemic due to the dominance of Amazon.com Inc.-led e-commerce — a phenomenon which only accelerated in the San Fernando and Santa Clarita Valleys in 2020 during lockdown — one high-powered broker said that store spaces and properties are giving way to other types of tenants and usages.In a conversation with the Business Journal, Cheri Blessing, principal of Calabasas-based Lee & Associates- LA North/Ventura Inc., said that she sees trends in the way malls are shifting to recover and prosper. Among the narratives unfolding in the past nine months: A rise of experiential retail concepts such as axe-throwing, escape rooms and trampoline fun zones; grocery stores driving repeat foot traffic; and most significantly, mixed-use and multifamily replacing big box stores.
“It’s a changing world,” Blessing said. “COVID made this much different than before. Retail was already struggling but COVID changed things.”Two of the most high-profile examples of the residential units in development at mall properties are in Thousand Oaks. Los Angeles-based firm Caruso has proposed to build 165 units at the The Lakes mall, which is only 40 percent occupied, according to Blessing. Another prime illustration is in a corner of the parking lot at Macerich’s The Oaks mall, which will be reserved for a multifamily development.
Currently, Caruso is in discussion about the project with the City of Thousand Oaks, which owns the land underneath The Lakes, a Caruso retail center.Last month the Thousand Oaks City Council voted 5-0 to approve a rezone for land behind The Lakes for a residential build. The vote paves the way for a land-use designation switch from commercial to residential, which will allow Caruso to build 165 apartments behind the outdoor shopping mall at 2200 E. Thousand Oaks Blvd.
Additionally, there is the Baxter Building behind Caruso’s The Promenade in Thousand Oaks, where Kennedy Wilson has been planning 240 residential units on 7.3 acres.“You’re going to see multifamily (adjacent) to the malls,” Blessing said. “Two years ago, you would never have heard of that.“Thousand Oaks is going through a general zone amendment to allow multifamily even up to six stories, which is unheard of as it had a three-story limit,” Blessing continued, adding that we may also see many more movie theaters on mall properties shut down completely and be replaced with other types of uses.Blessing said that such in-fill projects promise to unlock a lot of excitement and new revenue streams for the real estate market.At small strip centers, out-of-character businesses such as medical and dental practices and chiropractors are moving in.“Those types of businesses are out to relocate and some are downsizing,” Blessing said. “The upside is that it’s a tenant’s market.”Meanwhile, while some restaurants and hair salons went out of business because of the virus fallout, the closures have spurred people previously employed at those businesses to become entrepreneurs, opening new restaurants and salons.“It’s not a new business, but it’s a new business for them,” she said. “I’m happy to see people willing to risk and start a new business.”Ultimately, even a recalibration of the types of tenants moving in is welcome after the fiscal and logistical turbulence of 2020.“We’re grateful for any activity,” Blessing said. “There is still a demand of people for smaller retail buildings. If it makes sense, they move pretty quickly.”And on the sale with low interest rates and SBA loans allowing six months of low or no payment, it’s a buyer’s market.
“This is really galvanizing entrepreneurs,” she said. “There is no better time than now.”