The American mall isn’t dying — it’s evolving.

Once the epicenter of suburban life, these sprawling shopping centers are now being transformed into mixed-use hubs, combining housing, retail and entertainment in a bold bid to stay relevant in a changing world, reports CNBC.

Developers are bulldozing empty department stores like Macy’s and JCPenney, trading the racks and registers for luxury apartments and affordable housing.

In some cases, entire sections of malls are being reimagined with outdoor spaces, restaurants and modern living quarters. “The mall is becoming cool again,” Jacob Knudsen, vice president of development for Macerich, told CNBC, which is adding housing to FlatIron Crossing Mall in Broomfield, Colorado.

“Being able to live by it, work by it, play by it … we’re definitely seeing this as a trend,” he said.

The push to add apartments comes as malls fight for survival. Once anchored by department stores, and idolized in teen films of decades past as hangout spots, these spaces have seen a steady decline since the early 2000s.

With major retailers like Sears and JCPenney shuttering, developers are rethinking how to use these cavernous buildings. In some cases, they’ve been replaced by Amazon warehouses, pickleball courts or even hockey training centers.

But with a nationwide shortage of 4.5 million homes, apartments are becoming the go-to solution.

As of January 2022, nearly 200 US malls had plans to add housing, with dozens already completed or under construction.

In Phoenix, Arizona, the Paradise Valley Mall recently opened 400 luxury units, while Lafayette Square Mall in Indianapolis plans to debut 1,200 apartments by 2025, including affordable options in a former Sears.

For developers, the numbers make sense. Top-tier malls still draw crowds, but more than 34 million square feet of US mall space sit vacant, according to real estate data.

Oscar Parra of Pacific Retail Capital Partners explained the shift to the outlet: “There’s just too much retail in the US,” he said. “[It’s] like four times higher than any other nation … I don’t know of a market that needs a million square foot mall.”

His firm is turning a former Carson’s department store near Chicago into housing and cited a similar project at New Jersey’s Garden State Plaza. “They have excess land,” Parra said. “Instead of using it for retail, they’re putting in apartments. They didn’t see value in adding more retail to one of the most productive malls on the planet and that’s a signal.”

But living at the mall comes with challenges. High construction costs, outdated lease agreements and zoning laws can delay projects. And while some developers repurpose existing structures, many find it easier to demolish old buildings entirely.

“What we’ve learned is it’s better to disconnect it from the mall,” Parra told CNBC. “But mostly the idea is, tear the box down… scrape it, get rid of it and then create a little bit of a buffer between the mall and the [apartment building].”

For residents already living in these new spaces, the perks are undeniable. At The Arcade in Providence, Rhode Island — America’s oldest indoor mall — developers converted the upper floors into 48 micro-apartments. Amy Henion, a graphic designer, moved in two years ago.

“You have access to amenities that you don’t get if you’re just living in a home in a suburb,” she said. “If I want to get my hair cut, I can walk downstairs. If I want to pick up lunch, I don’t even have to leave the building, even if the weather outside is awful.”

In Milwaukee, Wisconsin, the Grand Avenue Mall now features apartments alongside TJ Maxx, Foot Locker and a food court with a self-serve beer tap.

Resident John Borchardt loves the convenience.

“We can just walk around like five city blocks without ever going outside,” he told the outlet. Still, quirks remain. Some units lack windows, while others struggle with privacy, as former storefront designs leave certain spaces exposed.

But for many, these are small trade-offs for living in a revitalized community. As malls reinvent themselves, developers see endless potential.

“Malls are an opportunity,” Knudsen said. “This is an opportunity to find land and have a built-in customer base to get people into the mall.”