Retail obsolescence varies considerably by center type but also by geographic region. The Midwest has the most obsolete retail, comprising nearly 1.8% of inventory. The region represents 20% of the total retail stock nationally, but 25% of all obsolete space. In contrast, the South’s share of obsolete space (37%) roughly matches its share of total inventory (38%).

Larger format retail was significantly overbuilt in the Midwest and South, especially during the 1980s and 1990s. In recent decades, these larger formats have been victimized by sales cannibalization and growing consumer preference for convenience and experiential retail. Comparatively, large format retail was not overbuilt as heavily in supply-constrained Northeastern metros, resulting in slightly less obsolescence.

Savvy redevelopment of obsolete retail into mixed-use spaces could be a pathway forward for some retail property owners. The transformation of Chicago’s Mega Mall on Logan Square into Logan’s Crossing, featuring 220 apartments and 67,000 sq. ft. of retail space, is an example of a successful mall redevelopment.

Understanding regional and format-based differences in retail obsolescence is crucial to navigating a changing retail environment and capitalizing on emerging opportunities to transform assets into higher and better use.