Electric Vehicles, Parking Mandates Change Decades of Status Quo, Forcing Builders to Rethink Projects
If developers and neighborhoods want to remake dying malls into successful mixed-use developments, there’s one concept they need to keep top-of-mind: parking.
The role of parking at retail centers, especially at stores located in mixed-use projects, is undergoing rapid change after decades of status quo, a group of developers and architects said during a Wednesday panel at the Urban Land Institute's fall conference in Dallas.
Electric vehicle charging stations, self-driving automobiles and walkable developments are combining to drive the change. Developers, architects and investors must design projects with fewer parking spaces, more sites for chargers and possibly converting parking decks for new uses, said Tipton Housewright, CEO of Dallas architecture firm Omni plan.
“We’re still building parking garages in these dense urban environments, but we’re in the middle of a shift in transportation,” Housewright said. “The way our customers arrive at retail properties will become very different than it has been in the past several decades.”
In other words, it’s not your grandfather’s mall, surrounded by acres of parking lots.
Barney McAuley, managing director of capital markets at Edge Realty Partners in Dallas, pointed to the example of the Shops at Redbird, a former struggling mall in south Dallas. The property’s renovation includes the conversion of a parking lot into one acre of greenspace.
“Malls are going to start looking a whole lot more like RedBird,” McAuley said during the panel.
Some real estate developers are already moving in that direction, pushed by the expected emergence of electric vehicles. Related Cos. and Starwood Capital Group last month partnered to advise property owners on how to add electric vehicle charging stations.
California last month became the first state to eliminate parking mandates for housing and commercial developments near public transportation. About 200 U.S. cities nationwide — including Albuquerque, New Mexico, and Fargo, North Dakota — have approved laws that lessen the requirements for parking at new retail and multifamily developments, according to the advocacy group Parking Reform Network.
Eliminating costly parking mandates will make it more likely that investors will back the development of more affordable housing, the group said.
To be certain, some big retail-anchored development projects will be successful even with thousands of surface parking spaces surrounding the store, said Steven Levin, CEO of Centennial Real Estate in Dallas. The 1.9 million-square-foot Nebraska Furniture Mart in The Colony, Texas, has been a major success despite its reliance on surface parking lots.
However, Bob Young, executive managing director at Dallas-based Weitzman, cautioned that Nebraska Furniture Mart is a “unicorn” that can’t be replicated in other parts of the country. The store, owned by Warren Buffett’s Berkshire Hathaway, is one of the largest retail properties in the world.
The same issues with parking that other developers face don’t apply at the Nebraska Furniture Mart property, Young said during the panel.
Developers and their equity partners should have no trouble finding malls available for redevelopment, McAuley said.
He expects the number of malls in the U.S. could drop to a few hundred.
Many malls continue to struggle, providing financial challenges for their landlords and investors. Crystal Mall in Waterford, Connecticut, fell into foreclosure this month after a Simon Property Group-led joint venture failed to pay off a loan. Crystal Mall has lost $135 million in value over the past decade.
While the supply of mall properties available for redevelopment should remain strong, convincing equity partners to finance projects with fewer parking spaces will be challenging, Terry Montesi, CEO of Trademark Property in Fort Worth, Texas, said during the panel.
That’s especially true with something like converting a parking deck into residential units.
“The idea that a garage can be converted is a great idea, but, so far, no equity partner has been ready yet to take that leap,” Montesi said.