Retail vacancies and bankruptcies were already rising before COVID-19 led to the temporary closure of retail businesses across the United States. In 2020, retailers vacated a record 159 million square feet of leasable space (Forbes). Further announcements of bankruptcy filings by a range of retailers indicate the continuation of this trend. Many of these retailers, particularly those focused on experiential services, will likely enjoy successful futures. More traditional retail spaces have a more challenging future, as they often don’t support the current trends of many up-and-coming retailers. With the recent and ongoing changes in traditional brick-and-mortar retail leasing, some mixed-use landlords concede their high aspirations and settle for secondary retail tenants: mattress stores, cell phone stores, and other retailers that likewise provide low probability for frequent and prolonged shopping experiences. Others find themselves with boarded-up storefronts, doomed by long-term retail vacancies.

The benefits of high foot traffic, while not easily distinguished monetarily, directly relate to the overall success of a mixed-use development and may draw new demographics of both residents and visitors. As developers and city planners seek this type of popularity, often the automatically proposed solution relies on flourishing retail components, filling the ground floor of urban or suburban blocks and initiating a level of activity associated with successful mixed-use developments. Ground-floor retail provides much-needed activity and access for communities. However, one problem remains: not every site is well-suited for a traditional ground-level retail solution.

Meanwhile, the United States experienced a housing supply deficit of 3.8 million units at the end of 2020 (Freddie Mac), a number continuing to rise with supply chain challenges, restrictive zoning regulations, lack of developable land, and rampant NIMBYism (not in my back yard) further hampering new development and attempts to remedy housing shortages. Of the 128.45 million households throughout the United States in 2020, 43 million of them (or 33 percent) lived in rental housing units (Statista). Summer of 2021 experienced four straight months of historic, record-low apartment vacancies, further fueled by a corresponding surge of lease renewals. As demand far outpaces supply, rents have rebounded beyond pre-pandemic rates in nearly all U.S. cities (Globe St). Rents increased 9.2 percent during the first half of 2021, as compared with the two to three percent increases typical in the same period for the years prior to the pandemic.

As an alternative solution to vacant retail spaces, the Re-Dwell concept proposes converting ground-floor spaces to accommodate residential units. In appropriate locations, this adaptive reuse solution may increase foot traffic and help support other neighborhood services, all while providing more consistent leasing income and much-needed housing.

Conversion of vacant ground-floor retail to residential requires consideration for the atypical depth of the units. With additional unit plan depth, access to natural light and high square footages create opportunities for unconventional design solutions. The Re-Dwell concept proposes interlocking plans, fitting within a typical 30-foot column grid, to achieve comfortable spaces within a manageable floor area. High ceilings and large storefront glazing increases access to natural light and interior windows allow light to flood deep within the units. Where ceiling heights permit, a second level with loft spaces further expands unit sizes and rental income. Luxury interior design in these unique residential spaces may attract a new demographic of tenants, further encouraging neighborhood growth.

Additionally, the recent California Assembly Bill 68 (AB 68), aimed at combating California’s housing shortage, outlines a framework for by-right conversion of vacant spaces in existing multifamily buildings to accessory dwelling units of up to 1,000 square feet. This opportunity aligns with the size of the Re-Dwell interlocking flats.