It’s easy to talk about returning to normal when the pandemic is tamed. But, normal is unlikely to mean the same — especially when it comes to the fates of offices, malls and shopping centers.
Will large retail outlets turn into empty wastelands as online shopping and delivery services like Amazon expand? Will office towers go dark, as companies lay off workers permanently, or ask them to keep telecommuting?
Going forward, how will the urban landscape, and our lifestyles, be altered?
For decades, Steve Nivin, professor of economics at St. Mary’s University and director of the SABÉR Research Institute, has closely tracked local, state and national economic trends.
Area retail stores and shopping plazas were already feeling the impacts of online commerce before COVID-19 struck the country.
“The pandemic hugely accelerated that trend,” Nivin said. “There are stores like Sears, where it was clearly the last nail in the coffin, and other big retailers going out of business or cutting back, but I don’t think this will eliminate physical retail.”
Just months ago, Sears shuttered its last San Antonio outlet.
“There’s more to shopping than buying. We’re social creatures. A large part of shopping or going to the mall is hanging out with friends and family – a kind of entertainment,” Nivin said. “There will definitely be serious changes, but I think malls will be around even as some stores shift more to online.”
Large footprints they created could morph into other uses.
“Malls are very unusual animals, given the combination of small shops and big anchors,” said veteran San Antonio real estate broker and developer Ed Cross. “For the hardest hit, it wouldn’t surprise me to see different uses, such as schools, government offices, medical facilities, and even Amazon facilities such as last-mile distribution or storefront pickup. Also, (The Shops at) La Cantera have shown an open-air mall will work in San Antonio, so ‘cracking open’ the mall and exposing main-circulation hallways, which are really pedestrian main streets to the outside, may work as well.”
Reimagining malls and big-box stores isn’t a new phenomenon, but COVID-19 is likely an accelerator. Early in the dwindling of brick-and-mortar retail, around the time of the Great Recession, Windsor Park Mall was transformed into Rackspace’s headquarters, infusing new economic life into the Windcrest area.
Wonderland of the Americas, on 61 acres of prime land in Balcones Heights at Loop 410/Interstate 10, has gone through several transitions. It still has retailers such as Target and Hobby Lobby, plus the Santikos Bijou Cinema Bistro, but also serves as a community-events host. The lower level is full of medical-related offices.
In addition, the “Little Shops” area offers short leases for beginning entrepreneurs.
“Sid Weiss (a partner in the ownership group) saw the medical-center concept and we’ve had success with it,” said Wonderland Marketing Director Victoria Hernandez. “You have to think outside the box in this business.”
Meanwhile, it’s more difficult to discern the survival strategies of nationally owned major San Antonio malls, since most are reluctant to share future plans or financial data.
“Big malls can be converted to new uses. You look at what you can do with these spaces without tearing them down,” said Char Miller, longtime San Antonio professor and writer, now W.M. Keck Professor of Environmental Analysis and History at California’s Pomona College. “Given climate change, San Antonio is online for a spike in temperatures, so maybe we can convert these gargantuan enclosed buildings in ways that are smart and sustainable. There’s not a city in the Southwest with enough park space. Imagine North Star Mall with some cool gym-like features to serve kids, or a zip line.”
Amazon continues to expand physically Miller noted, adding, “How ironic if Amazon effectively destroys the mall as a center of consumption, to make them into centers of distribution.”
Ted Flato, founding partner of San Antonio’s internationally acclaimed Lake/Flato Architects, is a champion of adaptive reuse, as showcased in his firm’s design for the defunct Pearl Brewery property. The abandoned industrial area on 22 prime riverside acres became a 958,320-square-foot “sustainable village” of living, dining, entertainment, retail space, and recreation.
Flato has put considerable thought into rebirthing large malls and strip centers.
“Retail was shrinking well before the pandemic, and we were being hired by developers to look at rehabbing shopping centers. They are often strategic locations in big suburban areas,” he said. “And, surface parking is an enormous footprint, often bigger than what is inside.”
Strategic location and the value of the real estate can make a mall ideal for transitioning into high-density housing, supporting the “village” concept Pearl exemplifies, Flato said.
Replacing acres of asphalt parking with high-density housing can support retail, restaurants and offices. The 5.2-acre Quarry Village, with the 280-unit Artessa apartments, surrounded by the Quarry Golf Course, and the 54-acre Alamo Quarry Market, with its iconic industrial buildings and smokestacks, is another “new urban” neighborhood well-positioned to weather COVID-19 shutdowns and isolation.
The outlook for growth is positive at Brooks, where Director of Planning and Development Marques Mitchell said there’s been no slowdown in housing expansion or light industrial manufacturing and distribution. The Cuisine Solutions plant announced in late 2018 it has begun hiring for its 290,000-square-foot operations.
“Of the various elements on our campus, retail has been the biggest challenge, and it has taken a hit with the pandemic,” Mitchell added, “but (we) have land available for it and we’re working with developers to lease it.”
In Converse, despite the crisis, expansion continues on an exponential track. With 3,000 new single-family homes platted and under construction, Converse Economic Development Corp. Executive Director Jimsi Kuborn said the growth trajectory is still strong.
“We granted assistance to 48 companies this summer through COVID relief funds. Unfortunately, we lost a few small businesses, but we have seen the spaces refilled fast. The landlord of one restaurant had five offers to re-lease the space very quickly,” Kuborn noted. “Businesses are always looking for the next untapped market, and Converse definitely has that circumstance.”
Office space is liable to be in flux here, as nationwide, for some time, Cross said.
“First, it’s a big question as to when corporations are going to ask people to come back. I also think corporate America is going to have a bunch of layoffs. That will mean downsizing (on) space. Most companies have leases, not ownership, so they may have 10,000 square feet now and only need 5,000.”
Cross added, “In my business right now, a lot of companies are saying they may try to sublease some of their space, but I’m not aware of any pre-COVID office decisions here that have been canceled — yet. I don’t think that is really going to manifest itself until early next year. San Antonio has more back-office workers, and (many of them) will be pushed out of offices to work remotely, which will lead to more co-working demand for spaces like WeWork.”
Locales such as Pearl and downtown will benefit by offering Wi-Fi, food and entertainment, Cross said, but also, perhaps, surviving malls converting vacated department stores into co-working spaces.
“This whole issue of repurposing buildings and real estate is going to be huge over the next 10 years. I am fascinated with the acceleration of all these trends. We are strapped to the back of a tiger, not sure where we are going.”