Malls Are Turning Empty Storefronts Into Startup Incubators

As malls around the country weather the effects of tenant bankruptcies, which this year alone claimed retailers from Bon-Ton department stores to Brookstone, owners are looking to different kinds of businesses to fill their place.

One strategy that’s gaining traction? Converting those vacant storefronts into startup incubators, giving nascent companies access to retail space and networking opportunities while offering shoppers the chance to discover new brands.

In November, one such innovation hub will open at the Cherry Hill Mall in southern New Jersey near Philadelphia. Incubator network 1776 is partnering with the Pennsylvania Real Estate Investment Trust (PREIT) to open an 11,000-square foot location near the flagship Nordstrom store in the mall.

“As the line between traditional retail and e-commerce continues to blur, we recognized the tremendous opportunity to partner with PREIT and bring together entrepreneurs and companies in a flexible environment while supporting creative collaboration across the industry,” said Jennifer Maher, CEO of 1776 in a statement. “The Cherry Hill Mall location allows us to be more creative with our incubator as retail evolves and the face of work shifts.”

Mall vacancies reached 8.6 percent in the second quarter of 2018 — the highest level since 2012 — with much of the impact resulting from the closure of about 800 Toys “R” Us stores.

In San Francisco, Bespoke, a coworking event and demo space geared toward the retail tech community, is in its fourth year in Westfield San Francisco Centre. It’s home to 80 companies and has held more than 350 events since it opened, including hackathons, digital marketing summits and product demos, bringing hundreds of thousands of potential new customers into the mall in the process.

There’s an added value for the mall’s traditional tenants, too, since they can tap into the startup communities for cutting-edge technology and innovative partnerships.

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