Patrick Bet-David: “Death of the Mall - Why Commercial Real Estate Is Getting Destroyed"

[Blue Horseshoe 348]

 

How To Bring ‘Zombie Malls’ Back To Life

.....Over the past 40 years, malls have been on a slow, steady decline to irrelevancy. Back in the 1980s, there were about 2,500 malls nationwide. Today some 700 malls are still operating, according to Nick Egelania, president of SiteWorks. And he told the Wall Street Journal that only about 150 will survive over the next ten years.....That projection may be a bit exaggerated. Nonetheless, malls are fighting for their lives, with about one-third well along in their death march, having occupancy rates of 70% or less.

And the pace has picked up since the pandemic. Mall foot traffic has continued to decline, down 7% for indoor malls and 9% for outlet malls from 2019 to 2022, according to Placer.ai.....Hastening their demise, malls have been losing their anchors. Sears operated about 300 stores in 2019 and only about 40 today. Macy’s went from 649 stores to 510 locations at the close of fiscal 2022, and some 250 Bon Ton stores have shuttered.

“You can throw a rock and hit a mall that’s half empty these days,” quipped Andrew Brezina, principal at CRTKL, a global architecture, planning and design firm that works with both retailers and malls in designing spaces....But on a more serious note, he added, “there exists a significant number of shopping malls such that their current occupancy or foot traffic levels are at or below 50% of their maximum capacity.”....Malls developed during the flight to the suburbs in the 1960s and 1970s. They were built in open fields on the outskirts of town that were designed for people to come and spend their money. Envisioned first as being retail-centric, they’ve taken steps to become consumer-centric, but that’s not enough anymore. Malls need to be community- and people-centric. Buying, shopping and spending money can’t be their primary reason for being.....“Centers must lean into what experiences they can offer that will get people to want to come back repeatedly and dwell. It’s got to be interesting and very specific to the local community and its unique needs,” Holstedt said.....Community-centered malls will become hotspots or local hubs for all kinds of local activities. They must be neighborhood gathering places where people can shop and dine and have access to services like healthcare, gyms, co-working and living spaces....

“Nobody wants to see big empty boxes in a mall, so there is a community need driving change. But sometimes, we find too many zoning restrictions placed on these spaces. City and local governments need to be more flexible. Sometimes it’s easier and less costly to build a new center from scratch than to remodel or repurpose an established mall,” Brezina said.....“It’s the social aspect that people are missing. Malls must provide a familiar space that is walkable, breathable and a real connection point where people of all ages can come and gather. We have to design malls to help people connect more intentionally,” Holstedt said.....First and foremost, the community-centric mall must be a fun place to go, not just a place to shop. Dining options add an experiential element, but it needs more than that, such as park-like play areas for kids, interactive local art and museum exhibits, concert venues, lending libraries and sporting activities for various ages.

....Their starting point is recognizing that malls serve two distinct markets with differing needs, specifically mall tenants and shoppers, and they operate in a dynamic environment involving the interaction of shoppers, retailers, competing malls and shops on the street.....“The retailing environment in a shopping mall is analogized to an ecosystem in which predators and prey coexist,” they wrote. “It is so complicated that the traditional theories of economics and models of business cannot be applied.” And they continued, the shopping mall model is “contingent on the interactive plays among shoppers, retailers and mall developers or operators.”.....The predators in the mall ecosystem include the mall operators who “prey” on retailers through rental leases and retailers that “prey” on shoppers by selling goods and services.....The mall must indirectly attract its tenants’ “prey” because “it does not produce any goods or services directly consumed by shoppers.” It does this by providing “an ecosystem (a platform) for predators and prey to coexist and prosper....”

https://www.forbes.com/sites/pamdanziger/2023/03/20/how-to-bring-zombie-malls-back-to-life

[Blue Horseshoe 348]

 

[Blue Horseshoe 348]