When's the Right Time to Rezone Abandoned Strip Malls?

Industry forecasters warn of a "retail apocalypse" with the large shift toward e-commerce over in-person purchases. The pattern of allotment of retail spaces relative to the number of retail vacancies is particularly interesting to planners hoping to create lively and livable urban downtowns and hubs.

Considering the lasting shift toward remote or hybrid work and online commerce, the market for retail space may not return to previous levels. Have zoning practices adjusted accordingly?

In "Retail on the Ground and on the Books: Vacancies and the (Mis)Match Between Retail Activity and Regulated Land Uses" (Journal of American Planning Association, Vol. 91, No. 2) Leah Brooks and Rachel Meltzer used a longitudinal analysis of lease data and land use in New York City and Los Angeles to measure how cities are zoning for retail spaces relative to demand.

Retail's Shaky Foundation

Despite a decline in urban retail since the mid-2010s, the number of retail leases and the amount of square footage dedicated to retail activity slowed to a plateau while retail land use grew.

This pattern, shown in New York City and Los Angeles, suggests that additional regulated retail space had a larger square footage or that new parcels were more often entirely dedicated to retail use. The authors note the misalignment between the quantity of land and space regulated for retail use and the amount of retail market activity.

Zoning vs. Reality

With the confirmed increase in retail vacancies, planners must begin considering the macroeconomic trends influencing commercial space obsolescence. Local zoning and comprehensive planning will need to adapt to and anticipate these tidal shifts in the market.

While local planning can mandate retail spaces, it cannot create actual retail activity on the ground. Cities often have broad goals for optimizing local commerce and retail services, but any municipal– and neighborhood–level strategy must incorporate the realities of national, and even global, sector-specific dynamics.

As cities emerge from the pandemic and adjust to new live–work patterns, planners will need to pay close attention to changing consumer and retailer behaviors. These macroconditions are largely out of the control of any one municipality.

Figure 6: The number of parcels is flat over time, but the total retail square footage is increasing.

The authors insist on cities' incentives to adjust planning practices to account for the oversupply of retail space documented in this study. Cities need to plan for strategies allowing for the repurpose or conversion of existing retail square footage that would otherwise remain unproductive.

Physically modifying spaces currently regulated as retail into commercial or residential uses is likely less costly than more popular concepts like office-to-residential conversions. The disruption of demand for physical commercial spaces in cities provides an opportunity for planners to reconsider how these vacant spaces are zoned and used.

Top image: Photo by iStock/Getty Images Plus/ Massimo Giachetti