Hartford Business Journal

8 HARTFORDBUSINESS.COM | OCTOBER 16, 2023 Deal Watch A rendering of "The Post" redevelopment. The proposed plan includes demolishing a portion of the Connecticut Post Mall in Milford and building mixed-use areas, with hundreds of apartments surrounding an open-area plaza, similar to a town green. RENDERING | CONTRIBUTED Struggling CT malls eye multifamily housing to fill empty retail space By Hanna Snyder Gambini hgambini@hartfordbusiness.com T wo Connecticut mall operators are seeking to convert part of their properties to multifamily housing, as they join the nationwide struggle to reinvent large indoor shopping centers suffering from high retail vacancies. Redeveloping mall space into apartments is a growing concept that industry experts say can help turnaround struggling retail centers, and boost the limited housing stock throughout Connecticut, which is grappling with a shortage of nearly 90,000 affordable rental units, according to the National Low Income Housing Coalition. The owner of Danbury Fair Mall, California-based real estate invest- ment firm Macerich, has proposed a zoning change that would allow it to convert the 116-acre property into mixed-use, including residential. Other non-retail options that have been floated include an adult day care center, assembly hall, college campus, or even an ice rink. The redevelopment plan includes 144 new apartments in a 75,000-square-foot former Lord & Taylor department store, along with restaurant and retail space as part of a "24-hour living" environment. The Danbury Fair Mall contains 1.6 million square feet, which represents roughly 40% of the retail space in Danbury. However, "the simple retail economic fact is that all 1.6 million square feet cannot be maintained as pure retail space into the future," said Thomas W. Beecher, an attorney who represents the mall owner. "Flexibility of uses are needed." That's the same sentiment shared by the owner of Milford's 1.3 million- square-foot Connecticut Post Mall. Austin, Texas-based Centennial Real Estate has been granted a zone change to create a mixed-use "live, work, play" area within Connecticut Post Mall, along Route 1, that could include up to 750 apartments, built in three phases. Death and rebirth of U.S. malls The 1970s brought an explosion of mall development. According to Forbes, the number of malls in the U.S. grew more than twice as fast as the population between 1970 and 2015. A 2017 report by Credit Suisse estimated that 20% to 25% of malls would shutter by 2022, largely because of store closures. News- break.com said the U.S. had around 2,500 malls at its peak, but only about 600 to 700 remain. In Connecticut, a number of malls in Waterbury, Enfield, Waterford and elsewhere have faced significant challenges with high vacancies, espe- cially in the wake of store closures by major brands like Lord & Taylor, Macy's and Sears. Other retail centers, like Westfarms in Farmington, have fared better. Malls across the country have been reinventing themselves for years, converting empty retail space to various uses like entertainment complexes, healthcare facilities and even pickleball courts. Housing is a new twist in the evolu- tion of Connecticut malls. Milford Mayor Richard M. Smith said malls are becoming outdated, and in an age when Amazon has taken over the retail market, "we've got to re-imagine." Phase one of "The Post" redevelopment includes demolishing a portion of the Connecticut Post Mall — including space formerly occu- pied by Macy's and Sears — and building mixed-use areas, with up to 250 apartments and outward-facing retail on the first floor, surrounding an open-area plaza, similar to a town green. Ten percent of the housing units would be affordable. Like the Danbury plan, The Post will still contain retail storefronts, but less space should drive down the vacancy rate and help attract high- er-profile merchants, especially with an embedded customer base living on-site, the mayor said. The project is also smartly posi- tioned near other commercial sites, right off the highway and not deep into city neighborhoods, he said. "My goal was to seek an integra- tion and to create a destination that people know they're going to want to go to," Smith said. Two additional development phases — each with up to 250 apartment units — could also occur, but only if there's enough demand for more housing, Smith said. Financial impact, market demand Milford City Planner David B. Sulkis said the mall's value, from a tax standpoint, has decreased over a number of years. The property had an appraised value of around $180 million in 2021, down from nearly $212 million in 2017, according to city property records. Phase one of the redevelopment plan has the potential to increase the mall's property value by millions of dollars, Smith said, and up to tens of millions if all phases are completed. The location and its amenities position The Post to be successful as a live, work, play destination, Sulkis said. "We're a stone's throw from New Haven and Fairfield County, not a long train ride to New York. So, it is a very attractive place to live. I think that bodes well for the future develop- ment," he said. Industry experts agree that outfitting struggling malls with apartments is a smart move to meet existing demand. David B. Sulkis Richard M. Smith

• Cover