Who’s Moving into Your Mall?
Have you noticed a change in your local mall recently? The traditional mall model that was developed nearly 70 years ago is heavily dependent on categories that are no longer fast-growing or meeting today’s consumer demands.
Department stores occupy 49% of the gross leasable area in U.S. shopping malls, with apparel & accessories stores occupying another 29%, according to a report by CBRE. These are two of the slowest growing categories in retail and the shift is resulting in a massive transformation of the tenants in malls.
Who is moving in?
Tech companies – Google recently announced they are taking over the Westside Pavilion Mall in West Los Angeles. The plan is to convert this 584,000 square foot structure into state-of-the-art office space. The redesigned structure will include terraces, flexible interior layouts, and folding glass walls to connect the inside of the offices to the outside environment.
People – Yes, people are moving into malls. Northbrook Mall in Chicago Illinois, for example, is in the process of tearing down a Macy’s store and building 300 apartments with a grocery store and a movie theater. Building apartments changes a mall from a 12-hour environment to an 18-hour environment. That extra time allows for the creation of more unique experiences, which leads us to our next point…
Experiences – Simon Mall, the largest mall developer in the US, is spending $4 billion to create “experiential destinations of the future” across its multiple locations. Tenants such as AMC Theaters, AC Hotels by Marriott, Shake Shack and LifeTime Fitness are examples of the experiential mall offerings.
Industry – Shuttered retail stores are getting a new life. Since 2016, 7.9 million square feet of retail space at 24 mall locations has been converted and built out into 10.9 million square feet of industrial space. These malls have become manufacturing plants, logistics hubs, Amazon e-commerce warehouses and fulfillment centers. The decline in value of mall real estate, zoning issues and tax implications will likely affect these types of tenants, but experts predict that the shift will continue, with additional revenue opportunities for the local area discovered along the way.
Who is moving into your local mall? Share your insights in the comments section.