(Bloomberg) -- Shopping malls can thrive by converting space vacated by department stores to alternative uses such as apartments or offices, according to Jeff Blau, chief executive officer of Related Cos.
Department stores, which have struggled for years with the rise of online shopping, have been battered by the pandemic. That includes J.C. Penney and Neiman Marcus, both of which have filed for bankruptcy.
Related developed Hudson Yards in Manhattan, a project that includes a luxury mall with a three-floor Neiman Marcus store that reportedly could become office space.
“If we were to convert a Neiman’s and put a tech company in there with 2,000 employees, the traffic generated from incremental office space would bring much more business to the retailers down below than a different department store,” Blau said during a webcast on Wednesday.
The biggest retail attractions for malls going forward are likely to be fitness centers, specialized retailers and grocers, Blau said.
In addition to Hudson Yards, New York-based Related has developed other mixed-use properties that include offices, hotels, retail and residential space. Blau also said:
- Tenants of Related’s class-A offices have asked about adding space, to allow workers to maintain healthy distance while sharing workspace.
- Related’s New York City offices tentatively will reopen “full force” on June 22 with health measures including touchless elevators, floor markings to maintain distance and temperature checks required for tenants.
- Related’s Equinox gyms and SoulCycle studios have been filled to capacity since reopening in Texas two weeks ago, signs that many people are emerging from lockdown intent on maintaining fitness.
- The trend of people fleeing New York and other urban centers will be short-lived -- perhaps 18 to 24 months -- because cities will continue to be hubs of innovation and commerce.
- Companies need big offices to foster innovation, creativity and corporate culture. Telecommuting “is a terrible way to run a company.”
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