Retail is dead. Long live retail!

The 20-Minute Community May Be The Answer To Moribund Retail Sites

Retail is dead. Long live retail!

Pundits have been declaring the death of retail malls since Amazon broadened its offerings beyond books in 1998 and began selling home improvement products, software, video games, music, gifts, clothing, and, well, just about everything else.

A closer look at today’s retail climate in the Hudson Valley and beyond tells a very different tale, really two tales: one of malls that have succumbed to competition from online retail, aggravated by the pandemic, and one of malls that have adapted and thrived, despite online retailing and other factors.

A quick look at Rockland’s two major malls, the Palisades Center and the Shops at Nanuet, and a few of its major strip centers, reveals excessive vacancies, down-market replacements for credit rated tenants, and large empty shells (former department stores) dark because zoning constraints limit options for redevelopment or adaptive re-use.

The Palisades Center opened in 1988 and likely peaked in or around 2010. It sits today with two vacant anchors (JC Penney and Lord & Taylor) and is mired in a foreclosure action that recently saw a receiver appointed to collect rents and care for the property.

The Shops At Nanuet lost Macy’s and Sears and most of its credit rated tenants. It hosts play-spaces and flea-market operations and was just acquired by a local developer for a fraction of its one-time value. Zoning restrictions prevent both retail malls from diversifying into other uses, including residential or office use. Hotels and motels are allowed, as are self-storage facilities. A portion of the former Macy’s building at the Shops At Nanuet now houses over 100,000 square feet of self-storage for the Storage King chain.

The situation at Rockland’s malls are not unique.

In “Old Malls, New Uses: A Playbook For The Adaptive Reuse Of Mall Properties” in the Hudson Valley, Pattern for Progress takes a look at Hudson Valley Malls and closed resort properties and how some of the owners have leveraged the properties into viable ventures.

The report looks at shopping malls that existed in Westchester that have been repurposed, specifically the White Plains Mall which was demolished and currently the site of a new housing project; the Galleria Mall Plans which is vacant and being repurposed and a transit-oriented, mixed-use development; and New Rochelle mall, a former indoor shopping mall that was replaced by an entertainment, retail and residential complex.

The Newburgh Mall has been reinvented with a casino, and with new leases with Harbor Freight, O’Reilly Auto Parts, and Planet Fitness to transform the complex into an open-air retail strip center. And, the Galleria Mall, an active mall property with plans to add nearly 500 units of housing and hotel. Pyramid, which owns the Galleria Mall, owns the Palisades Center in West Nyack, and has been floating plans to add residential units there despite the foreclosure action and the difficulties of getting zoning amendments from Clarkstown that would allow residential uses at the mall site.

Seeking Out What Works

Pattern For Progress interviewed several people who are helping to redevelop mall properties in other parts of New York and the United States. It talked with local government officials, economic development authorities, engineers, and architects who are bringing new life to old mall properties.

Pattern spoke with StoneCreek Partners, a Las Vegas-based real estate advisory firm that tracks about 150 shopping malls that are in various stages of redevelopment. According to StoneCreek, malls are likely “the most active asset class being redeveloped in the current real estate market.”

The dominant redevelopment concept works around “20-minute communities” – developments that replace mall properties with walkable, mixed-use communities that include housing, entertainment, restaurants, public space, retail, and education and health centers, all interconnected by sidewalks and trails.

One property leveraging that concept is at the The Apex at Crossgates, developed by Pyramid Management Group, where a $58 million investment includes 222 townhomes and apartments in a portion of the mall’s parking lot that will feature a pool, dog park, pickleball court, and other amenities.

According to Pattern, “Former mall properties are often great locations for 20-minute communities because their large buildings, expansive parking lots, and surrounding lands offer a large canvas for master planning. The sites generally have utilities such as water, sewer, and ample electricity. And, in some locations, developers have found that former mall properties have good connections to surrounding communities through existing sidewalks, mass transit, or other infrastructure.”

20-minute communities on former mall properties provide an opportunity to develop new housing at a greater scale and density, helping to mitigate our regional housing crisis. Walkable communities with access to transportation can provide neighborhood-based employment, foster the utilization of public transportation, and reduce reliance on cars and the need for large parking fields.

Also studied is the use of eminent domain (an example includes the taking of the Boulevard Mall by the Town of Amherst) to redevelop large, under-utilized sites and replace outdated malls with plans for new communities that include housing, retail, and other uses where developers are stymied or unwilling or unable to invest in their existing assets.

In Kingston, the city is utilizing eminent domain to take the site where a mall was promised but never built in the Rondout District and redeveloping the property into a mixed use, residential community adjacent to its vibrant Rondout waterfront district.

The Pattern report looks at other properties in Salt Lake City, Utah and Charlotte, North Carolina where new projects are rising on the sites of former shopping malls.

Open-air neighborhood shopping centers, like the Newburgh Mall and the Shops At Nanuet, and particularly those anchored by a grocery store on a long-term lease, are in demand. The Stop-N-Shop that replaced Fairway at the center has a 20-year lease with four five-year options.

Nationally, rising occupancy rates in outdoor retail centers have drawn institutional investors.

According to Green Street , a real estate research firm, pedestrian traffic to grocery stores was up 12 percent in the third quarter of 2024 compared to the same period on 2019. Grocery-anchored centers traditionally fill smaller spaces with small businesses that don’t compete with online players, such as coffee shops, medical users, hair and nail salons.

According to the Wall Street Journal, at least $10 billion worth of U.S. open-air retail portfolios are expected to change hands in 2025, based on a study by CBRE, a real estate specialist.

While the open-air concept seems viable, the lessons of the “20-minute community” should not be lost, and the addition of housing options in proximity to open-air malls should be a priority for developers and municipal planners alike.

The Pattern report provides a list of resources for economic development, property owners and investors to consider, including links to articles from the Urban Land Institute, StoneCreek Partners, Gensler Architects, and Camoin Associates.