Before the pandemic, the biggest uncertainty in the commercial real estate market was how to redevelop indoor malls. Malls have been waning in popularity for years, and many have already been repurposed into other asset classes. Research from CoStar shows that these properties are prime candidates for redevelopment thanks to rapidly increasing vacancy rates, which are expected to continue to grow this year.

Mall vacancy rates fell 150 basis points last year, and CoStar expects that they will decline an additional 170 basis points in 2021. "Throughout a substantial portion of the pandemic, up until the vaccines were made widely available, many consumers were hesitant to be inside with large groups of people," Robin Trantham, senior consultant at CoStar Advisory Services, tells GlobeSt.com. "Given that most traditional malls across the country are enclosed, foot traffic to malls dropped dramatically during the height of the pandemic."

But, that isn't the only reason the vacancy rate has increased. Trantham says that malls have a higher concentration of traditional retailers, which are facing steep competition from ecommerce. "As e-commerce sales growth boomed during the pandemic, the average mall tenant sustained a larger impact to brick-and-mortar foot traffic and sales," he says.