Five Alternative Tenants That Could Save Dying Shopping Malls

The traditional shopping mall consisting of retailers, a food court and maybe a hair salon or two is going the way of the dinosaur. But experts say they can survive — and even thrive — if they repurpose themselves into a mix of cool retailers and eateries, residences, co-working spaces, walk-in medical clinics and even unique attractions like aquariums.

“The millennials and Gen Zers whose feet will provide most of the foot traffic in retail centers in the coming decades seek retail, entertainment and dining with a point of difference. A destination with a cool factor is what gets them out of the house,” Colin Shaughnessy, executive vice president at commercial real estate firm Unibail-Rodamco-Westfield and U.S. leasing chief at its Westfield malls division, wrote in a recent opinion piece for trade publication Chain Store Age.

Shaughnessy, whose firm owns 28 U.S. malls, wrote that “we make sure our centers are places people want to be by improving both the physical and digital infrastructure, as well as the tenant mix itself — a combination of traditional retail with a focus on dynamic, industry-leading concepts in food, health and wellness, fitness and entertainment.”

For example, the company’s Westfield UTC mall in San Diego combines premium retailers like Hermes with fitness site SoulCycle and an adjacent 23-story, 300-unit residence.

Similarly, the firm’s Westfield Valley Fair in California’s Silicon Valley combines luxury brands like Prada and Cartier with lots of eateries, digitally native startup retailers and entertainment options such as a ShowPlace ICON cinema. Shaughnessy said the location has attracted 42 new retailers and restaurants this year alone.

“The new reality is that the modern-day shopping destination is not going to be the static, entirely enclosed fixture that it was known for in decades past,” he wrote. “Change itself will be the lifeblood of its continued popularity and survival.”

In Oklahoma City, the Quail Springs Mall tore down the site of a former Macy’s and added a 177,000-square-foot Lifetime Fitness complex with indoor and outdoor pools, tennis courts and more. Other new attractions include the Blue Zoo Aquarium — which is available for kids’ parties — and a coming Round1 entertainment center that will include bowling, an arcade, a restaurant and a bar.

“Today’s consumer expects far more than traditional retail from their shopping center,” Kelly Waswo, the mall’s senior general manager, told The Oklahoman.

A new whitepaper from Placer.ai, which analyzes retail foot traffic, finds that adding nontraditional tenants can not only repopulate a mall, but can also bring in customers during nontraditional hours.

“With mall visitors wanting to do more today than just shop and new brands across sectors looking for offline homes, malls and shopping centers have an opportunity to think outside the box about the types of tenants they want to host,” Placer wrote in its study. “By transforming struggling retail spaces into offices, schools, fitness centers or medical centers, malls can create engaging experiences that attract traffic and enable these locations to thrive.”

Below are some of the highlighted retail alternatives to traditional stores that have been linked to an increase in foot traffic:

Fitness Centers

Placer found that while malls traditionally get the most traffic on weekends, a study of five fitness chains’ mall locations found that 15.6 percent of visits happen on weekdays, compared to only 11.1 percent on weekends. Visits also jump between 9 a.m. and 10 a.m. and again at around 6 p.m. – atypical times for traditional shopping mall traffic.

Walk-In Health Clinics 

Placer cited data from commercial real estate services firm JLL indicating that health clinics are popular tenants for landlords because they typically have high credit ratings and sign long leases.

Even more importantly, patients often shop at nearby stores before or after their visits. For instance, Placer found that 11.7 percent of patients at Aspen Dental clinics visit a nearby shop or service venue before their appointments, while 22.4 percent do so afterward.

Co-Working Spaces and Offices 

Researchers found that when a co-working space called Industrious opened in Arizona’s Scottdale Fashion Square in January 2019, the mall’s foot traffic nearly doubled in the first month and remained stable at the higher number throughout the year.

‘Micro-Everything’ Centers 

Malls can serve as a great option for digitally focused firms to open what Placer researchers call a “micro-everything center,” which is a combination brick-and-mortar store, fulfillment center for online sales and location to accept returns.

“Working directly with retailers to use some [mall space] for micro-fulfillment could provide a powerful win-win,” the study’s authors wrote.

Pop-Up Stores 

Placer wrote that pop-up shops “are the perfect solution for brands in need of a physical presence in turbulent times. They offer an easy, cost-effective, low-risk way to physically encounter customers and test the market.”

Cool pop-up shops can also bring in lots of foot traffic. For example, Placer noted that when Kim Kardashian opened a pop-up beauty shop for some four months in late 2018 and early 2019 at Costa Mesa, California’s South Coast Plaza, foot traffic at the mall rose about 4 percent from year-earlier levels.