Over the past few decades, there have been countless stories predicting the demise of the American mall. The latest to repeat the old storyline was The New York Times. “An Ode to Shopping Malls” takes the usual approach of focusing on a handful of shuttered properties, comparing and contrasting with the way they looked roughly three decades ago. Very few businesses look the same as they did 30 years ago. Like other successful industries, retail real estate has evolved and kept pace with changing consumer demand. That’s why the industry has managed to stay relevant and vibrant. Industry-wide occupancy rates stand at a healthy 92 percent.
This transformation is well-documented, as I pointed out in a recent column. Consumers are demanding new experiences, services and the integration of technology into these spaces, and they’re getting it. Malls aren’t just for shopping anymore either – they deliver entertainment, health, education and other services so that they remain gathering places for people to shop, learn and stay fit.
The New York Times article missed broader industry trends. Malls are putting their land to use. Marcus & Millichap predicts 81 million square feet of retail space will be absorbed by new businesses and new ideas this year, on net.
Malls also continue to serve as hubs of economic activity. One million food and beverage jobs have been created over the past three years alone, frequently due to the opening of restaurants in malls. Retail sales jobs are expected to grow by 7 percent through 2024, keeping pace with other occupations.
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And despite a generation of e-commerce sales, the U.S. Census Retail Trade Annual Sales Report shows that pure-play, e-commerce from online-only retailers makes up less than 5 percent of total retail sales. Though more of our interactions take place digitally, malls continue to serve as social meccas where people meet. In fact, it seems that the amount of time we spend on screens today might just increase our need for physical interaction.
It’s tempting to look at headlines around retail store closures and assume the “mall is dying.” It’s an old narrative that journalists continue to try to bring back to life. It’s also wrong, and the retail real estate industry is not just moving on. It is moving forward.
Date:Aug 07, 2017