Remember those gigantic cubes of stores surrounded by a sea of pavement? Oh yeah…they’re called malls. Over the last decade, the concept of the enclosed mall has been nearly put on life-support and only to be easily forgotten with replacement by the lifestyle retail center. The recent trend to create open-air retail centers such as the Grove, Americana, Santa Monica Place and 3rd Street Promenade have changed the traditional shopping experience but right when people thought enclosed malls were dead, a recent study by the Urban Land Institute begs to differ.
Since the early 2000’s, the enclosed mall has been in a death spiral, reaching its lowest point in the last couple years due to the take over of new shopping experiences. The majority of these malls were built during the suburban housing boom of the 1980’s and have remained unchanged for the last several decades but mall Real Estate Investment Trusts (REITs) have decided to spice things up to help spark a comeback. By taking an unconventional approach to bring in new tenants, who would normally occupy a “big-box” retail store, Tenants such as Best Buy, Dick’s Sporting Goods and Target are starting to make the move into the enclosed mall.
So what does this mean?
Well, since the decline of the real estate market in 2007, the vacancy rate for the enclosed mall has risen to over 12% and this in turn caused many major retail anchors such at Nordstrom’s and Cheesecake Factory to relocate to the more attractive and highly visited lifestyle retail centers. With the loss of major anchors, slowly but surely, the smaller stores were beginning to die off, but now with the addition of high volume retailers like Target and Best Buy, daily mall spending has increased to numbers higher than pre 2007 amounts.
The revitalization of the enclosed mall is also beneficial because it now allows consumers to take part in daily shopping routines in more convenient locations that promote public interaction. As you can see, the addition of the lifestyle retail center has caused a shift in the shopping spectrum, but does not mean that the enclosed mall is going anywhere, well it would be too costly to tear it down, its just now attracting a new customer base. I’m curious to see the long-term effects of having multiple strong retail options available to consumers.
Interesting post Darren. I can definitely attest to point you make about enclosed shopping malls - many of them nearby my home seem to be on the decline, so it's good to hear that they are using big box retailers to try to stay competitive. Although, I have to say, after visiting some of the the "lifestyle retail centers" that you mention, such as The Grove and The Americana, I realized that the environment is just better overall at these places. I think these outdoor mixed-use facilities are the future of shopping, but it's still nice to know that the enclosed malls of the 1980s are able to stay afloat rather than being left to fall into disrepair.
ReplyDelete