As we previously wrote in, Do Mall Owners Need to Innovate More?, there seems to be a tremendous opportunity for a value-add investment play on many of the smaller, older malls. One suggestion we put forth, Should Mall Owners Be Looking to Create Co-Working Spaces?, was that mall owners should look to use co-working spaces to fill some of their vacant inventory.
Recently, this idea has become more and more accepted as large Co-Working space companies like Industrious, are now looking to malls for new co-working spaces. Lauren Thomas (@laurenthomasx3) has an article, Shopping mall owners fill empty stores with offices as coworking companies branch out, for CNBC highlighting Industrious’s move into malls.
Coworking space is predicted to grow at retail properties by an annual rate of 25 percent through 2023, according to a new report from commercial real estate service provider Jones Lang LaSalle. Shared office space is expected to account for roughly 3.4 million square feet of retail space by then, JLL found in surveying 75 different coworking locations at malls, strip centers and within street-level retail shops across the U.S.
In addition to the ability to fill abandoned retail space, there is also the opportunity for malls to act as the perfect co-working location due to the number of stores/amenities still available at many malls.
Retail real estate analysts agree there is a lot of appeal in bringing more coworking uses into retail. As tenants, coworking companies are typically signing normal- to longer-term leases, and these deals promise to bring more foot traffic to the property.
“We are finding in general that these retail spaces have all kinds of amenities that workers want,” said James Cook, director of research at JLL’s Americas division. “You can meet up with people, you have places to run errands, and you can grab a bite to eat. … I think in many cases it makes sense.”