The Age of the Mall is over

The Age of the Mall is over

Kate Folk put it the most poetically, and tragically, in a New York Times letter recently: “No other building displays the capriciousness of human desire with such brutal rigor — a once-beloved edifice that, in the span of a few years, has become so worthless no one even cares enough to tear it down.” The mall: an iconic American 80’s baby that is now all grown up and ready to move out of the modern shopping scene. Or is it? Well it is true that, “People need a reason to visit a mall besides shopping”, as Geri Stengal wrote in a recent article in Forbes, summarizing strategies retailers must undertake to re-envision the buildings formerly known as malls. Matt Kopsky, a REIT analyst at Edward Jones, paralleled this sentiment when interviewed by Shopping Centers Today. “”For high-quality centers, those that are driving traffic with good retail tenants, the goal is to create a place where people want to sleep, work and play–in effect, little communities,” said Kopsky. Fung Global Retail touted that The Mall Is Not Dead according to a retail report first published in 2016. Today, the trusted retail research company (now Coresight Research) reaffirms that bold headline by predicting the state of the mall in the next five years. They acknowledge the steady decline, estimating one in five department store closures by 2023, or about 1,200 stores. Not surprisingly, they also predict a redirect in consumer spending away from retail and into services, to the tune of $78 billion nationwide. This is in sync with numerous recent headlines, since at least last year, that have dubbed the slew of store closures and brick-and-more sales numbers decline (attributed to e-commerce rise) as the ‘Retail Apocalypse’.

What does this mean for shopping mall owners? Nationwide, there are a variety of strategies for repurposing now defuct or underutilized mall spaces. In Austin, Texas, Austin Community College is making its new digital media center spanning 125,000 square feet of what was the city’s first indoor mall. Additionally, the redesign will include a culinary arts and hospitality center, continuing education classrooms, a regional health sciences and STEM lab, business incubator space, performance space and black box theater, conference center, and a regional workforce innovation center. Ballston Common Mall in Arlington, Virginia, is currently undergoing $330M in renovations that will add multifamily units, bowling, karaoke and bocce ball in experimental tenant Punch Bowl Social, and add an open-air center to local metro lines. A half dozen malls were reviewed by Business Insider, which gave a look into mall transformations that have occurred in the last ten years with their space recaptured as offices, apartment homes, medical buildings, and more. Simon Property Group is redeveloping many of the regional malls it owns, including Seattle’s Northgate Mall. Northgate, the first indoor shopping mall in the country in 1950, will add up to 750,000 square feet of Class A office space, multifamily units above current retail, and possible green and public spaces. Construction may begin on Northgate’s redevelopment as early as next year–convenient considering that immediately to the south, the Northgate Link Light Rail Station is scheduled for completion in 2021. As consumer spending continues to be shaped by technology and millennial consumer demands, it is likely we will continue to see the convergence of a variety of property types into more mixed-use, community spaces to live, work, shop, eat, learn, and be entertained.