As More Retailers Close Their Doors, Coworking Offers Unique Solution


[Published on Coworking Insights, Oct. 31, 2019

Link to full article here.]

The mass closure of under-performing retail stores is far from over. As the “retail apocalypse” picks up speed, more closings have already taken place in 2019 than in all of 2018, with almost 6,000 stores shutting their doors.

From Payless ShoeSource announcing the closure of all 2,500 stores in North America in February to Toys “R” Us’ more recent decision to close its entire U.S. fleet, the drumbeat of retail store struggles is loud—and showing no signs of quieting down.

It’s now sadly common to see large-scale retail vacancies in American cities and suburbs alike. Once-popular U.S. retailers like Gap, Macy’s, J.C. Penney, Forever 21, Charlotte Russe, Sears, J.Crew, David’s Bridal, and Guitar Center have all closed a significant number of stores, which has led to many malls looking more like ghost-towns than fashion hubs.

Though e-commerce has disrupted the role that brick-and-mortar stores play in customers’ lives, many retailers have started looking to the flexible office industry as a solution to their costly real estate contracts.


Luckily, the retail sector can take comfort in the fact that its vacant spaces are greatly appealing to coworking space developers.

In a study about the future of retail, real estate firm JLL confirmed that coworking space in malls, street-front locations, and other retail properties will grow at an annual rate of 25% through 2023, reaching around 3.4 million square feet. (Note: This 3.4 million square feet is a small fraction of the 60 million square feet of coworking space currently available in conventional offices across the U.S.)

“The current retail market is pushing landlords to find new ways to invigorate their space with alternative tenants, including coworking spaces,” according to Holly Rome, Director of Retail Leasing, JLL. “Setting up a coworking space in a retail property provides workers a fun, yet functional space with great accessibility, ample parking, and value-add amenities like personal services, shopping, and food options. On the flip-side these tenants bring in daily traffic and have a stable master lease that’s typically five to 10 years.”

Already, a number of retail owners and coworking operators have partnered together to provide shared offices in storefront locations.

One example of this is mall owner Macerich’s partnership with coworking space operator Industrious, which was announced in August 2018. The partnership, which turns unused retail locations into coworking spaces, officially opening its first Industrious-managed coworking space inside of a Macerich mall in January 2019.

The space, which opened inside of Scottsdale’s Fashion Square in Arizona, has proven to be a viable — and lucrative — solution, offering members access to top-tier dining, shopping, and entertainment after a day of coworking. In this kind of retail-based space, members are able to pop into Shake Shack for lunch or fulfill an online order at an Amazon kiosk without taking too much time away from their desk.

“Our settings deliver top-tier, built-in amenities for today’s professionals, which is why a partnership with experience-focused Industrious makes so much sense,” said Arthur M. Coppola, CEO of Macerich.

These hybrid spaces in shopping malls are not just appearing in the U.S., however. Mindshare in Toronto’s suburb of Mississauga is housed within a shopping center; HUBBA-TO in Bangkok is located on the third floor of the Habito Mall; and Cre8 in Jakarta is in the popular PIK Avenue shopping mall in Indonesia—to name a few!


It is this same experience-driven philosophy that is leading retailers to search for ways to reinvigorate their properties in a manner that better engages today’s customers.

In some vacant locations, mall operators are opening up their real estate to retail and technology startups as incubation space.

At New Jersey’s Cherry Hill Mall, several e-commerce startups occupy 11,000 square feet of vacant space near anchor tenant Nordstrom. These startups are not only able to test their concepts before establishing pop-up shops, but it also gives customers a fun, new reason to visit the mall.

Chicago’s Water Tower Place plans to launch a similar 15,000-square-foot venture known as ‘Cowork at the Mall’ in what was once a Sports Authority store. Additionally, Simon Property Group—the largest mall operator in the U.S.—is working to develop a nationwide retail incubation program for a number of its properties.

These incubators offer fledgling companies the opportunity to work alongside experienced operators and network with already-established brands. Plus, they can help to restore much-needed foot traffic in malls, proving to be a mutually beneficial relationship for both retailers and coworking operators.

[End of excerpt. Link to full article here.]

Published by Kelly Konya

Kelly is a freelance writer and poet native to Cleveland, Ohio.

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