News

Malls Are Shrinking — But Still Getting Facelifts

As they continue to struggle in the face of eCommerce, some shopping malls in the U.S. aren’t going down without a fight. Rather, they’re pivoting to become a little less, a little more and, in some cases, something else entirely.

The Wall Street Journal has reported on a number of different directions that shopping malls are going in to stay afloat — or a least remain viable pieces of real estate in other forms.

The former Highland Mall in Austin, Texas, for example, is being converted into a campus for Austin Community College. That’s after “competition came up and killed it,” according to Matt Whelan, principal at developer Red Leaf Properties LLC. In York, Pennsylvania, meanwhile, about 50,000 square feet of retail space was eliminated at West Manchester Town Center in order to create an open-air plaza. Tony Ruggeri, who worked on that project, told WSJ: “You have to create an environment that people want to come to.”

Data from the real estate data firm CoStar Group Inc. shows, by the year’s end, there will be 48.3 square feet of retail space per person in the U.S., down from the record of 49.8 set in 2009.

After a boom of retail space expansion in the U.S. between 1970 and 2009 — a period during which the amount of retail square footage per person in the country increased by 54 percent — the 2007 recession brought about the beginning of a sharp decline in shopping malls’ fortunes, which has reverberated to this day.

Reflecting on the 1970–2009 expansion, Suzanne Mulvee, a research director at CoStar, told WSJ: “The fact is that we built far too much.”

According to Green Street Advisors, which tracks retail real estate, since 2008, only one mall with a minimum of 1 million leasable square feet has opened in the U.S., whereas 54 properties meeting those requirements were built between 1995 and 2005.

The dwindling demand for shopping malls, combined with the ongoing rise in online commerce (growing at 15 percent annually), has driven retail property owners, like the ones aforementioned, to be more creative in the use of their space. For example, a shopping development in Fort Worth, Texas, will allocate 20,000 square feet of retail space for a public area that will provide an “experience” for shoppers, according to Terry Montesi, founder of Trademark Property Co. The same is true for the reimagining of Randall Park Mall in North Randall, Ohio, and the Westdale Mall in Cedar Rapids, Iowa — which, when the project is completed, will exclude some retail space in favor of a hotel, offices and a public area.

——————————–

Latest Insights:

Our data and analytics team has developed a number of creative methodologies and frameworks that measure and benchmark the innovation that’s reshaping the payments and commerce ecosystem. In the November 2019 AML/KYC Report, Zillow’s Justin Farris tells PYMNTS how the platform incorporates stringent authentication without making the onboarding and buying experiences too complex.

TRENDING RIGHT NOW