8 May Malls Aren't Dead: The Rise of the Reimagined Shopping Experience May 8, 2024 By Melisa Rana Commercial Real Estate News, Property Investment business tips, real estate trends 0 MALLS AREN'T DEAD: THE RISE OF THE REIMAGINED SHOPPING EXPERIENCE May 8, 2024 | Commercial Real Estate News, Property Investment | real estate trends, business tips It seems the rumors of the modern shopping mall's demise have been greatly exaggerated. For years, the rise of convenient e-commerce alternatives cast a shadow over the once-bustling indoor mall. Vacancies increased, and foot traffic steadily declined. The pandemic further fueled the narrative of the shopping mall's inevitable death, a stark contrast to its heyday as the North American public square in the 80s and 90s. However, a recent study by Placer.ai, an analytics company specializing in commercial real estate data, paints a brighter picture. They compared indoor mall, open-air shopping center, and outlet mall visits in 2024 to pre-pandemic (2019) levels. The results show shoppers are returning, with open-air centers exceeding 2019 numbers for the first time in Q1 of 2024. Indoor malls and outlet malls are lagging behind, but indoor malls have rebounded significantly, going from nearly 30% less traffic in Q1 2021 to only 5% below 2019 numbers in Q1 2024. While many malls are thriving in 2024, the growth isn't universal. Let's explore the factors contributing to success in this evolving market. A Smaller, More Streamlined Inventory It's important to note that not all malls are experiencing the recovery. Industry analysts suggest there are still too many malls for a healthy market. Malls are categorized by class based on their dominance in a region, with Class-A malls being the highest performers and Class-C the lowest. The positive statistics primarily reflect a return to top-tier locations. For example, real estate investment trust Simon reported a 95.2% occupancy rate at their malls and premium outlets as of October 30, 2023. Similarly, Class-A malls nationwide have benefited from the closure of struggling competitors, with more closures expected. While closures aren't typically positive, these statistics suggest shoppers are willing to return to high-quality experiences. So, what separates the successful malls from the struggling ones? New Tenants Cater to Modern Shoppers Beyond a focus on high-quality maintenance and stylish design, the biggest difference between today's malls and those of the past is the tenant mix. Department store anchors and traditional apparel and beauty stores are on the decline, replaced by luxury brands and experiential locations. Millennials and Gen Z flock to competitive socializing businesses like Topgolf, AceBounce, and Flight Club, and malls are incorporating these unconventional tenantsto better serve their audience. For some shopping centers, the challenge of replacing foot traffic lost from anchor stores has been met with creative solutions. Gyms, pickleball courts, and other unconventional options are attracting new customers. Mall owners willing to embrace creativity are finding success with shorter leases and experimental pop-up shops. This doesn't mean traditional brands are entirely out of the picture. Stores that struggled at Class-A malls are finding success as focal points at Class-B locations, and some are thriving at outlet malls. Shopping center owners who prioritize tenants that align with their shoppers' interests and needs are experiencing the most stability and growth in a volatile market. Embracing Unique Identities Successful mall owners and developers are those who dare to stand out from the typical, often stale, shopping center experience. Chicago's Navy Pierexemplifies this approach. They prioritize local culture in their architecture and tenant selection, featuring Chicago-style popcorn, ice cream, and other local favorites. This focus on unique experiences is a key shift in strategy. Malls are no longer competing solely on familiar brands; they're becoming destinations. This is evident in the willingness of digital-first brands like Warby Parker to establish physical presences in top-tier malls (according to Business Insider). By embracing experimentation and adapting to the new demands of shoppers, malls and shopping centers are finding their footing in a strange and unpredictable retail landscape. The narrative of the mall's demise is being rewritten. To stay up to date on the latest CRE trends and maintenance tips, check out our blog: The Commercial Inspector. National Property Inspections is made up of a nationwide network of experienced and professional commercial property inspectors. Connect with a local inspector today for all your commercial or multi-location inspection needs! Comments are closed.