More SoCal malls combat decline of retail industry by adding housing

The American mall has been struggling for years.

A 2017 study predicted one in four would close by 2022, but it's not simply because of online shopping.

Times are changing because in years past going to the mall was an event for the family.

"You got up on Saturday morning, you said, 'Let's go to the mall.' You didn't say 'I need to go buy a pair of jeans.' You said, 'Let's go to the mall, because that was entertaining,'" says Steven Levin, the founder and CEO of Centennial Real Estate.

Massive space for more stores isn't the answer, but reducing retail space and adding residential housing might be.

Malls are often in prime locations, with great visibility, access to major roads and with significant infrastructure in place.

That's a distinct advantage for getting new residential development off the ground. Especially for successful malls like MainPlace in Santa Ana, owned by Centennial Real Estate, which is adding hundreds of apartments.

Levin points out, "There's a tremendous demand for residential, to be built in an environment that provides all of these amenities of dining and music and art and shopping."

MainPlace isn't the only Southern California shopping mall with some type of residential plan in place. It's a trend that could prove to be the solution for something trending down, but then also end up solving other issues like housing.

"It's been a real challenge to go buy that first home or get into the homeownership market. That's happening in the rental market now to where inventories are so low, vacancies are so low that there's just not that much out there and people who are trying to rent a home now are really getting squeezed too," says Scott Wild, a senior vice president for John Burns Real Estate Consulting.

Further expansion is planned at MainPlace. Covered parking, which largely sits vacant now, will remain, while the abundance of outdoor parking lots will be redeveloped.

The Laguna Hills Mall, now known as Five Lagunas was a struggling mall. It will reduce retail space by half while adding a hotel and residential units.

Plans are also underway for the Village at Buena Park to redesign the former Sears property and add over 1100 apartments. Every unit added will increase inventory and hopefully drive down the cost of living for everyone.

"What we see here is a good template for other cities that have large malls and commercial centers like this, because they are really reactivating the space and adapting to what the new times are," says Santa Ana Mayor Vicente Sarmiento.

Wild adds, "The renters that are moving into these new apartments are very likely to become routine shoppers in the mall. So it's a symbiotic relationship. They're helping the mall. They're making the apartments more attractive too."