How much does that cost, and is anyone going to pay that cost when residential rents are also falling? Commercial property is so different from living quarters that I wouldn't be surprised if "conversion" isn't actually possible, short of just razing it and building from scratch.

I've seen that conversion in Silicon Valley.

There is the Valco mall in Cupertino being demolished for mixed use residential, retail and office space. That mall was dying for a decade.

https://revitalizevallco.com/

Then there is Santana Row in San Jose. Used to be a strip mall as I recall. Now its high end shopping and residential.

https://en.wikipedia.org/wiki/Santana_Row

In practice unfortunately most attempts seem to get aborted as zoning requirements differ too much to be economical. For one the plumbing tends to come with per resident requirements for the units they wish to sell for health code reasons of wanting a shower, toliet, and bath.

Going more "dorm" style could work for low end if there wasn't a pandemic and even then it would carry plenty of risks that would scare people away from such an arrangement let alone the consumer desires.