There is, however, a widespread and underused class of real estate that holds the potential to make a dent in this figure. Long-suffering retail—strip malls, shopping centers, dead malls and their cousins—could be converted into hundreds of thousands of new apartments nationwide, with just a bit of work.

Turning just 10% of underperforming retail sites into housing could create 700,000 new units nationwide, according to a November report from Enterprise Community Partners. While that’s just a drop in the bucket of America’s multimillion-unit housing shortage, it could make a real difference for some communities. In the Boston area, converting just 10% of strip malls would be enough to absorb all the population growth in the region for the next decade, according to a 2021 study from Massachusetts’ Metropolitan Area Planning Council. (A property did not need to be entirely vacant to be a good candidate for adding housing, and many housing conversions in this study propose keeping ground-floor retail in the apartment buildings.)

“I think this has huge potential across the U.S.,” June Williamson, a professor of architecture at City College of New York and co-author of several books on building reuse, told Fortune.

“All the land that’s already developed for retail use and scattered at very low density all around the United States has the capacity to accommodate all different kinds of housing types,” she added.

To be sure, the capacity for a sweeping change doesn’t mean it will happen—and converting retail into housing comes with its own set of physical and political challenges. Still, there are key reasons that converting dead retail is a much more promising solution to the housing crisis than office-to-apartment projects, which have proven much pricier and rarer than initially thought. And there are key reasons why it’s still just potential right now and isn’t really happening.

Retail is everywhere

Decades of sprawl-oriented development have left the U.S. with a glut of retail space. There are 116,000 shopping centers across the nation, according to ICSC (formerly the International Council of Shopping Centers). That includes not just large malls but downtown shopping centers and smaller hubs like strip malls.

“Strip malls, they’re ubiquitous, they’re everywhere, they’re often underperforming,” MAPC’s land use planning director, Mark Racicot, told Fortune. “In many cases, they already fit in the neighborhood.” 

While not all retail is underperforming, much of it is—and the economic climate means improvement is unlikely. Some 50,000 stores are expected to close across the U.S. over the next five years, according to a 2023 UBS report. 

Already, dozens of malls have made the switch to include housing. In Irondequoit, New York, a suburb of Rochester, an abandoned Sears building was turned into 157 low-income and senior housing dubbed Skyview Park Apartments; the development opened in 2022. In Santa Ana, Calif., a low-rise strip mall turned into a community center that includes 55 apartments. And in Aurora, Ill., a portion of the Fox Valley Mall was converted into 304 units, and another mall in Vernon Hills, Ill. now boasts 311 housing units. Both developments include shared amenities and retail space, David Dowell, a principal with national architecture and urban design firm El Dorado, tells Fortune.

“While it’s too soon to say they have ‘succeeded,’ the mix of uses will certainly make these luxury offerings more appealing,” Dowell says.

As of 2022, nearly 200 malls across America had plans to add residential units, according to the Orange County Register; 33 had made those plans since the start of the pandemic. 

Office conversions are hard—retail, less so

For a moment in the early post-pandemic era, offices seemed like the magic bullet to solve the housing shortage. Remote and hybrid work created a massive glut of unused office space— about 1 billion square feet by the turn of the decade—and some began to wonder about reusing this empty space as housing. 

But the flood of office conversions was more of a trickle. Between 2016 and 2021, only about 30 office-to-residential projects came online each year, according to a July 2023 Deloitte study. And as of the time of the study, there were only 217 such conversion projects in the immediate pipeline. 

“If you look at what has been converted since 2016 and what is even planned to be converted through 2025, that’s only 90 million square feet,” Julie Whelan, CBRE’s global head of occupier research, previously told Fortune. “The conversions that have happened and that are underway are really only a drop in the bucket with the vacancy that’s out there.”

So why aren’t developers and politicians doing more to push these types of conversion projects? It’s because, often, they’re even more costly and time-consuming than new construction. Indeed, a February report from Goldman Sachs says office acquisition prices would need to fall nearly 50% for these projects to be “financially feasible,” given how much upfront work they require and the still-high price of office space. Brick-and-mortar retail has also suffered from the pandemic and its attendant surge in e-commerce. Unused retail, however, is often easier to convert into housing than empty office buildings.

Most mall redevelopments, rather than eliminating retail altogether, include retail, housing, and other types of uses in a close space. That’s in line with developers’ current focus on creating what they call “18-hour neighborhoods,” or live-work-play centers where residents can essentially get the most bang for their buck. In other words, they can live in the same place—or very close to—where they shop and work without spending extra money on travel. It’s a good deal for the remaining retail stores, too, which benefit from the increased foot traffic in the area.

And vacant mall locations can be better suited for these developments instead of office buildings because the infrastructure to support these mixed-used spaces already exists in retail centers, Kurt Volkman, associate principal at national architecture, engineering, and planning firm HED, told Fortune, because mall locations often have existing infrastructure like parking and access to public transportation.

“Now, these spaces are an opportunity for redevelopment, as their large floor plates and locations at the far ends of the retail development offer flexibility when converting to housing, entertainment, or commercial spaces,” Volkman says. “Developers who see the opportunity and transform retail centers built for another era into mixed-use spaces that meet today’s challenges will reshape retail for a more profitable future.”

Plus, retail locations just have more space. The design of a mall often comes packed with vast amounts of empty concrete—one or several large, low-slung buildings surrounded by sprawling parking lots. Because of this, it can be relatively easy for a developer to simply add more buildings to a project by building on excess parking space, according to City College’s Williamson. Existing retail can be turned into medical, office, or housing. 

And mall-to-housing conversions have the potential to come together much faster than new construction “since there is already an existing built structure on a piece of land that is already permitted for at least one type of development,” Dowell says.

“The developer doesn’t have to look for a site to build on or obtain permits for construction, taking down trees, and the like,” he says. “The major time concern will be getting the redevelopment plan approved by local governing authorities.”

It’s not all smooth sailing 

Still, in addition to timing challenges, mall redevelopment projects come with their own set of drawbacks. While the open layout of these buildings can lend itself to more flexible design, lighting and utility work can become an issue, depending on the property. 

Because shopping malls were built with fewer windows, that would “have to be addressed with architectural interventions,” since residential spaces need to offer a certain level of window-to-floor ratio so occupants get natural light throughout their unit, Dowel says. 

“Residences also need plumbing, electrical, heating, cooling, and ventilation, plus other types of infrastructure like WiFi or cable TV service,” Dowel says. “While a mall will have these, they will not likely be easily adapted to residential use, meaning significant upgrades and alterations.”