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<\/p>\nIncreased demand for housing and a scarcity of land\u00a0have brought decades-old malls with acres of surface parking\u00a0to the top of developers’ shopping lists.<\/p>\n
In the last year, three South Florida malls have announced or launched major redevelopments that will add thousands of new residential units and hundreds of hotel rooms\u00a0around upgraded retail space to lure back shoppers.<\/p>\n
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\n The Galleria Mall at Fort Lauderdale at 2414 E. Sunrise Blvd.\n <\/p>\n
\u201cI think that is breathing a lot of life or second wind into these properties where a lot of these properties are really well located,\u201d Native Realty<\/a> CEO Jaime Sturgis<\/a> said. \u201cThey have a tremendous amount of surface parking, oftentimes, which really isn’t necessarily the highest and best use, especially in an urban environment.\u201d<\/p>\n Galleria Mall at Fort Lauderdale, Southland Mall in Cutler Bay and Sunset Place in South Miami, three properties that have seen their stars fade in recent years,\u00a0 have been taken over by developers looking to add a roughly $4B in combined redevelopment,\u00a0including more than 8,000 residential units.<\/p>\n While South Florida is home to stalwart indoor shopping centers \u2014 like Aventura Mall<\/a>, which was named the best mall in the country<\/a>\u00a0by USA Today this year \u2014 the region’s retail market is starting to feel some pressure.<\/p>\n Stabilized rents in Miami-Dade fell 6.1% year-over-year to $42.56 per SF and vacancy\u00a0ticked\u00a0up less than a percentage point to 3.2%, according to a third-quarter Colliers report<\/a>. Negative absorption for the third quarter totaled 23K SF, bringing the year\u2019s total to negative 118K SF, according to the report.<\/p>\n The three malls targeted for new development sit on more than 100 acres combined and have\u00a0had declining occupancy and values since before the pandemic.<\/p>\n Coupled with a shortage of about 10,600 housing units annually<\/a> in Miami-Dade County alone and the rarity of large infill land sites,\u00a0malls that aren\u2019t performing have become increasingly attractive to ambitious builders.<\/p>\n \u201cThe main driver behind it all is densification and lack of availability of land for development, especially in South Florida,\u201d Colliers<\/a>\u00a0Executive Vice President of Retail Services Dave Preston said. \u201cThe more people we get, the denser we get and the more expensive land gets.\u201d<\/p>\n The Galleria at Fort Lauderdale hasn\u2019t broken 70% occupancy since 2023, when it was first listed<\/a> for sale. Built in the 1980s, the 800K SF\u00a0mall at 2414 E. Sunrise Blvd.\u00a0was\u00a0purchased last month<\/a> for $73M by a group of investors, including\u00a0 Russell Galbut\u2019s GFO Investments\u00a0and Atlas Hill, owned by Sandeep Mathrani<\/a>, former CEO of\u00a0WeWork<\/a>\u00a0and General Growth Properties.<\/p>\n The previous owners had wanted to demolish half the asset to convert it into residential but failed after multiple attempts due to neighborhood pushback<\/a>.\u00a0<\/p>\n But instead of tearing the structure down, the new ownership wants to\u00a0spend $100M renovating\u00a0it, Mathrani and Galbut told Bisnow in a joint phone interview. They expect\u00a0the effort to bring occupancy back up above 90%.<\/p>\n \u201cThis piece of real estate needed an operator who could invest in the asset,\u201d Mathrani said.<\/p>\n On the Galleria’s existing\u00a0parking lots, the developers are looking to build eight residential towers<\/a> with more than 3,000 units and a 170-key hotel.\u00a0<\/p>\n \u201cYou have 32 acres of the most underutilized real estate in all of Fort Lauderdale, two blocks from the ocean,\u201d Galbut said.<\/p>\n The developers are planning to leverage the Live Local Act<\/a> \u2014 a law designed to allow developers to bypass local zoning restrictions if they dedicate at least 40% of a project’s units to workforce or affordable housing, priced between 80% and 120% of the area median income.<\/p>\n Live Local has made\u00a0mall redevelopments like these more approachable, as it allows developers to build housing by right at densities that might have been blocked by local zoning rules.<\/p>\n \u201cOther developers that had gone and made these proposals had to go through a traditional zoning process and get feedback and appease local residents and all that,\u201d Sturgis said.\u00a0<\/p>\n \u201cTo a developer, that is predictability, and if you have a clear and faster path in order to be able to achieve your goal, then it’s mitigating some of your risk, which is the name of the game,\u201d he added.<\/p>\n \n Southplace City is one of the largest developments Cutler Bay has seen in three decades.\n <\/p>\n Southland Mall in Cutler Bay, built in 1978, fits a similar mold.\u00a0<\/p>\n After struggling with major vacancies since 2017, losing big-box stores Kmart and Sears,\u00a0it\u00a0fell into foreclosure\u00a0in 2021.\u00a0American Landmark<\/a> and BH Group<\/a>\u00a0paid $100M\u00a0in 2022<\/a> for the 80 acres at 20505 S. Dixie Highway and are now pursuing a $1.5B redevelopment<\/a> without demolishing the 990K SF mall.\u00a0<\/p>\n Malls like Southland have struggled with an overreliance on big-box anchors, competition against e-commerce and a weak sense of place, American Landmark Chief Development Officer Ron Gaither said.<\/p>\n \u201cI think what you’re seeing is an evolution in thinking to try to reverse that and offer something much more compelling for the consumer,\u201d Gaither said.<\/p>\n The developers plan to build 4,295 apartments, 60K SF of medical office space, 150K SF of retail, 150 hotel rooms and a community amphitheater, renaming it Southplace City. The first phase, the 350-unit The Current apartment building, broke ground in March.<\/p>\n \u201cIt’s very rare to find [nearly] 100 acres of essentially infill land that can be developed for the uses that we have here,\u201d Gaither said. \u201cFive thousand residential units is a tremendous opportunity for any developer.\u201d<\/p>\n Because Southland’s previous owner had entitled the property for redevelopment before losing it to its lender,\u00a0the mall was\u00a0an appealing takeover candidate for new developers with ambition.<\/p>\n \u201cThat was one of the key things that really excited us, the size and location of the play and the entitlement opportunity, which mitigated a lot of the development risk,\u201d he added.<\/p>\n The 26-year-old The Shops at Sunset Place at 5701 Sunset Drive has withstood high vacancy for years, often referred to as a \u201cghost town.\u201d<\/p>\n An affiliate of Midtown Development purchased the mall in 2021<\/a> for $65.5M from Federal Realty Investment Trust, a large discount from the $111M it traded for in 2015<\/a>.<\/p>\n Midtown\u00a0received approval last year for development plans for 1,513 residential units, a 287-key hotel and 350K SF of commercial space spanning nine towers on the 10-acre plot. Its demolition is planned for early next year<\/a>.<\/p>\n<\/p>\n