CHICAGO — Forty-seven dead and dying suburban shopping malls are now in active conversion to logistics sites or mixed-use developments, according to a tracking project that has been monitoring the sector for the past four years. The current cohort is the largest single-year wave the sector has produced.

The conversions reflect a convergence of two patterns the underlying real-estate dynamics have made unavoidable: the continued retail-format obsolescence that has, year by year, removed properties from the viable mall stock; and the logistics demand that has, over the same period, made conversion economically attractive in a meaningful subset of cases.

What the conversions look like

The conversions take several forms. The most economically attractive, and therefore the most common, are conversions to last-mile distribution centres serving the surrounding metropolitan-area population. The mall site's existing road infrastructure, ample parking, and proximity to dense population are all assets in the logistics use; the mall building itself is typically demolished.

A smaller number of conversions take the form of mixed-use developments combining residential, smaller retail, and structured logistics components. These are operationally more complex but, in the metros where they have been pursued, have produced returns that justify the complexity.

Where the conversions are happening

The geographic distribution of the conversions tracks the population-density patterns of the surrounding metros. The conversions are most numerous in the inner-ring suburbs of dense metros where last-mile distribution demand is most acute and where the alternative uses for the underlying land are most valuable.

Conversions in the outer-ring and exurban geographies are rarer because the underlying logistics economics are less favourable and the alternative-use values are lower. Some properties in these geographies have stalled in the conversion process for years and may, on present trends, simply be demolished without a clear successor use.

What the local-government dimension looks like

Local governments, on whose zoning and tax-base structures the conversions land most directly, have approached the wave with varying degrees of constructiveness. The most accommodating jurisdictions have produced quick approval timelines and have, in some cases, offered tax-abatement structures designed to encourage productive use.

Less accommodating jurisdictions have, with similar consistency, allowed the conversion timelines to extend. The cost of slow approval is, in most cases, paid by the surrounding community in the form of an extended period of dead retail rather than by the developer in any direct way.

What the longer pattern suggests

The longer pattern the conversions reflect is the continued working-out of the retail-real-estate adjustment that began roughly a decade ago and that has produced more displaced retail square-footage than the construction of new retail formats has absorbed.

That adjustment is not finished, and the conversion pipeline reflects only a portion of the displaced stock that will, over the next decade, require some form of repurposing. The other portions are working through their own adjustment paths at varying paces; the patterns will be visible in the data over multiple cycles.