Canada's Condominium Magazine

Dead malls and green buildings: the future of real estate?

Predictions always have to be taken with a grain of salt. Remember how the president of Digital Equipment Corp. said, back in 1977, “There is no reason anyone would want a computer in their home”? No matter how you look at it, this one has to count as a “miss.” But experts still make them, and there’s entertainment value in a prediction, if nothing else.

On the subject of commercial real estate, pundits and professional players have a lot to say. For one thing, shopping malls will be “extinct,” or most of them. There have been no new malls built in the US since 2006, it turns out, and it was a surprise to learn that only about 1,100 of them were ever built (far fewer in Canada). In Toronto, at least, some of the major malls like Sherway Gardens and Yorkdale have been expanding quite dramatically, so there’s no immediate sign of extinction here.

But some real estate professionals see e-commerce as the culprit in the demise of the American mall. As the big department stores that anchor most malls lose market share to e-commerce, they will close and leave the malls struggling. The big-box stores like Wal-Mart will continue to dominate in their segments. Only malls that reinvent themselves as old-fashioned town centres, with doctors and day care and many other reasons to go there will survive. But this will only come about when our way of life “swings back to revolving around more compact communities,” according to the CEO of the US Green Building Council. Is that really going to happen? We’ll see.

Another prediction is that green buildings will come of age. In twenty-five years, all buildings will have to meet LEED standards, at least according to a real estate executive at Cohen and Steers. It could mean that a lot of poorly built buildings now standing will have to be torn down.

Related to that e-commerce point, stores that do keep a brick-and-mortar presence will have to become more high-tech, letting customers touch and try out the things they sell, as well as offering the merchandise for sale. Stores will become more like the Apple stores, in other words. Busy, filled with people playing with the products and talking to sales reps. Compare that with a traditional store where everything is “don’t touch” and “ask for assistance” and you get an idea of how things will be.

Another big thing coming is the baby boomers. Because there are so many of them, and they are reaching the age when they will have special needs in their housing, their impact is going to be huge. This isn’t really much of a prediction—anyone can see it coming. But senior housing, they say, is going to explode in the next couple of years, and stay big for the next twenty-five. Not only will housing have to be built or modified to accommodate the boomers, but there will be an unprecedented construction boom in new medical facilities to take care of them.

 

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