Carol Todreas, Todreas Hanley Associates

Is it the rise of many new retailers, the optimism around innovation and entrepreneurship, the large numbers of shopping age millennials or just the relatively stable economy that is the reason that malls are, with caution, somewhat “back.”

We hear mostly about redone class-A malls that cater to the upscale shopper. However, recently there has been increasing interest from investors in class-B malls which never recovered from the recession and are available at very attractive prices. These malls are in secondary markets and many have or will have large vacancies owing to the problems of their under performing anchor department stores like JC Penny’s, Sears, and Macy’s.

Despite all this, some class -B malls are being purchased for redevelopment. Owners of class-B malls will generally face a property with major holes at one or both ends where lived their “anchor” stores.

So then comes the challenge of how to reconfigure and re-tenant such a property and for what? More retail? If so, what kind? Lifestyle? Outlet? Mixed-use? Offices? Entertainment? Medical? For example it might make sense to subdivide one such space into smaller retail stores while the other large space might be leased for a medical center or several restaurants and a grocery store. What will transform the beast into a beauty so it becomes a destination center and profitable asset?

Whatever the new mix, the mall will have to provide the consumer with an interesting and enjoyable experience and this usually translates to more open space, different forms of entertainment, and flexible promotional space for seasonal markets and/or temporary stores. Together it must add up to a sense of things, experiences, products and place that are not found on the Internet.

So what is the takeaway? It is some class-B malls are worthy of redevelopment at this time when investment is relatively inexpensive.

However, there will be many land use changes, so it is a good idea early in the process to check out development issues, such as zoning and other development regulations that could lead to a long term hold up. And as always consider a retail market consultant for relevant information on markets, merchandising, diverse tenants, new retail concepts, economic and community realities. It can only help.

Carol Todreas is a principal at Todreas Hanley Associates, Cambridge, Mass.