Student Corner: Challenges and Opportunities in Strip Mall Redevelopment

Community and Economic Development – Blog by UNC School of Government

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Student Corner: Challenges and Opportunities in Strip Mall Redevelopment

By CED Program Interns & Students

Published June 2, 2016

The ubiquitous strip mall lines arterial roads in, out, and often through nearly every town and city in the United States and presents unique challenges to communities in North Carolina looking to revitalize aging commercial corridors. While big-box stores have undergone creative transformations to remain active spaces and indoor shopping malls attract catalytic revitalization efforts as discussed in previous CED blog posts, the many small strip malls characterized by a small or no anchor tenants have struggled to combat vacancy, with 2011 seeing the highest vacancy rates nationally at over 11%, leading to eyesores for communities and challenges for local planners and developers.

From 15-501 in the Triangle to Charlotte’s 56 designated Business Corridors slated for potential redevelopment, North Carolina’s retail landscape is filled with strip mall development with high redevelopment opportunities. Mixed use retrofit of strip malls has been touted as bringing added value to commercial corridors, better serve aging baby-boomers who would like to age-in-place but don’t want or cannot depend on auto-oriented centers, and as a way to better utilize existing infrastructure in the inner suburbs of urban areas.  Why then, has there been so few successful redevelopments, and even less retrofits? The answer lies with the nature of strip malls and the land use associated with them. Their solutions take vision, creativity and planning to accomplish.

Scale, Access, and Organizing

A primary problem of suburban redevelopment along commercial corridors is the difficulty in achieving scale. Strip malls may represent the majority of retail space, but have many disparate and absentee owners making assembling parcels for a transformative project difficult. So too are different owners in different positions of negotiability, as strip malls can maintain profitability long beyond their intended lifespan. With little expense in upfitting space and tenants that can reliably pay modest rents, strip malls are a relatively lucrative source of income for owners. Years of disinvestment and tenants that provide little community benefit however are perennial problems not seen in the bottom line.

While arterial roads drive traffic to shopping centers, their high speeds and poor walkability are often barriers to otherwise attractive redevelopment opportunities. The prospect of increased traffic along major commuting and shopping routes is unpopular and transit service is often severely limited at best. Despite this some communities in North Carolina have successfully spurred redevelopment of strip malls through large investments in transit to bring value to commercial corridors. Charlottes’ blue line extension currently under construction will run past the strip malls near University Place, where the transit investment is likely to attract development well beyond the intensity a strip mall can provide.

Strong community guidance and support for transformative retrofit projects are often lacking in commercial corridors. With splintered communities along suburban corridors and the difficulty in visualizing strip mall redevelopment, projects can easily become mired in local political realities. When community support can be organized to advocate for better utilization of flagging strip malls, as seen in the Renaissance Plaza development in Greensboro, it propels the process forward by incentivizing parties to work together to find common ground. Greensboro public meetings for the strip mall redevelopment drew crowds of hundreds of residents, many city council members, and state representatives. Due in large part to this engagement and the favorable financing provided by Self Help Credit Union, the center is on track to be redeveloped with a 10,500 SF co-op grocery store anchor. The case shows how an engaged community can leverage their voices with the political agency to act on a project and secure favorable terms of redevelopment.

Keeping What Works

Even in overcoming the challenges to strip mall redevelopment, communities must proceed with caution to not disrupt valuable assets in the process. Strip malls have long been associated with providing a pool of affordable retail space for local entrepreneurialism like the ethnic food destinations in Cary and small businesses in Asheville. Key to keeping successful centers like these alive while retrofitting or redeveloping struggling and vacant centers requires careful consideration and identification. Huntington Beach, CA offers one way forward. There, town officials triage aging shopping centers for redevelopment opportunities. After extensive public engagement, the city identified only the areas of strip mall development that are unlikely to be profitable in the long term, work in tandem with planned transit investments, and support the kind of development the city wanted. The end result is a model that encourages polycentric retail cores, and more diverse uses to add value to real estate developments and offer sustainable solutions to seemingly intractable strip mall sites. Despite the challenges associated with strip mall redevelopment in American suburbs, towns, and cities, the opportunities for communities to reorient their retail pace towards higher value development that better suits the needs of local governments and residents alike.

Peter Gorman is a Master’s candidate in the UNC-Chapel Hill Department of City and Regional Planning specializing in Economic Development and a Community Revitalization Fellow with the Development Finance Initiative.