Here’s what could happen to America’s hundreds of dead malls

A Sears store inside the Woodbridge Center Mall in Woodbridge, New Jersey. Business Insider/Sarah Jacobs

It appears that the mall as we know it may be dead. Long live the retrofitted mall! New uses, new infill, new life for the king of the American consumerism. Read more about retrofit options that can boost an entire community from Leanna Garfield of the Business insider:

“More than 6,400 store locations have announced closures this year. In a recent report, analysts from Credit Suisse predicted that 20% to 25% of malls — about 220 to 275 shopping centers — would shutter over the next five years, largely because of store closures.

Malls of the future have an opportunity to fulfill other community needs besides commerce, June Williamson, an architecture professor at the City College of New

“The development climate of malls were driven less by demand and more by opportunity,” Williamson said. “As new centers get built, anchor stores are lured away, and a cannibalization process begins. … Only so many consumers are going to malls, and they will flock to newer ones. If developers build a new mall, they are inevitably undercutting another property. So older properties have to get repositioned every decade, or they will die.”

Closed department stores will most likely become other businesses that could benefit from the large square footage, such as fitness centers, churches, offices, public libraries, and even medical clinics, Williamson says.

Since most food courts have a lot of natural light, they could be used as gathering spaces for community groups or daycare centers if they closed down, Williamson says. Some food courts, however, are redeveloping into clusters of higher-priced restaurants.

Mall atriums are wide open spaces that can allow for events like concerts or fashion shows, or serve as car showrooms — all of which generate revenue, Williamson says.

Many dead retail spaces, Williamson says, will most likely morph into businesses that have community functions, such as apartments, public libraries, indoor farms, and refrigerated spaces for processing food for local restaurants or grocery stores.

Malls may increasingly turn their surface parking lots into space that emphasizes walking rather than driving.

Williamson describes ethnic malls as shopping centers that target a specific ethnic demographic in a community. She says this type of customized mall can thrive more than a traditional mall because it better meets local shoppers’ needs.

To subsidize regular retail shops, destination malls, also called super regional malls or lifestyle centers, use experiential attractions like movie theaters, bars, casinos, restaurants, rock climbing walls, laser tag, and even roller coasters.”

Learn more about Mall Retrofits in the Sprawl Repair Manual.

Westfield: Lowy family sells shopping centre empire to French property giant for $32 billion

The giant retail mall operator, Westfield, is being purchased by French property giant Unibail-Rodamco, to remain resilient in the face of the changing retail market. High-end markets remain their target. Agility and diversity will be key for retailers and their employees who continue to bear the burden of the changing retail climate. Communities that promote mixed-use mall repairs may have a chance to combat the sliding economy.

“The acquisition of Westfield is a natural extension of Unibail-Rodamco’s strategy of concentration, differentiation and innovation. It adds a number of new attractive retail markets in London and the wealthiest catchment areas in the United States.”

The Lowy family will retain control of Westfield’s retail technology platform, OneMarket, which will be spun off into a new company on the ASX, with Steven Lowy remaining as chairman.

Westfield Corporation runs 45 shopping centres and airport retail precincts in the US, UK and Italy, including the retail space in the new World Trade Centre in New York.

Retailers across the United States are in what appears to be terminal decline as shoppers abandon traditional bricks and mortar while the digital revolution lays waste to traditional shopping.

That, in turn, has begun to harm shopping malls as retailers have struggled to pay rents with many closing down their outlets.

Thousands of mall-based stores have shut their doors across the US this year, including stalwarts such as JC Penney, Macy’s, Sears and K-Mart reducing their physical footprint.

That, in turn, has begun to affect employment. Until as recently as two years ago, shopping malls were providing America with 200,000 extra jobs a year, but that trend has now suddenly reversed.

According to the latest Bureau of Labour Statistics, the retail industry has lost an average of 9,000 jobs a month this year. This time last year, malls provided jobs growth of around 17,000 a month.

The Triumph of the Latin American Mall

Suddenly it’s 1990: Oakland Mall in Guatemala City, where the mall culture is in full bloom. (Nolan Gray/CityLab)

As American malls are failing, Latin American malls seem to be thriving. Social and economic factors appear to be the key. The good news for American retailers is that those who retrofit based on the resurgent Main Street model will be best positioned to capitalize on changing trends.

“…fear of violent crime and a relative lack of high-quality urban environments are also factors in the Latin American mall boom … malls provide a safe place to shop, and mall managers invest heavily in security. Combine this with the lack of reliable mail and home delivery service that hampers the e-commerce sector and there isn’t much competition for Latin America’s rising middle-class shoppers.

In most U.S. cities, on the other hand, violent crime has fallen dramatically over the last 25 years, and walkable urban neighborhoods that boast restaurants, bars, salons, and “experiential retail” are thriving. In this sense, the decline of the North American mall reflects a positive trend: The Main Streets that malls once menaced are coming back. Such amenity-laden neighborhoods are also in a better position than suburban malls to fend off the threat of online shopping.

In the U.S. and Canada, malls are still overwhelmingly anchored by major retailers like Sears, JC Penney, and Macy’s. And as the fortunes of these department stores have declined, they’ve dragged the malls they’re attached to with them. In Latin America, on the other hand, a whole variety of businesses act as anchors. Grocery stores are common in Latin American malls and are often situated at the end of long corridors lined with smaller shops, creating a steady flow of foot traffic.

When we feel nostalgia for malls, maybe what we’re really feeling is nostalgia a time when incomes were rising and the quality of life of average people was improving.”

How a mall-turned-public park saved downtown Columbus

Columbus Commons hosts more than 200 events a year, including a Harvest Fair on September 30, 2017. Marielle Segarra, Marketplace

When mall repair is not economically or structurally feasible, sometimes re-greening a dead mall site in the form of a park or urban agriculture is the best option. The City Center mall in Columbus, Ohio has been reincarnated as a downtown park called Columbus Commons, and it’s driving the resurgence of activity and property value.

“Capitol South, a nonprofit development corporation created by the city, took over the property and started looking at redevelopment plans. The group considered turning the mall into an office building or a medical-research center. “Each one of the plans that we looked at either financially didn’t pencil out, or from a constructability point of view, it simply couldn’t be done,” said Guy Worley, CEO of Capitol South.

Instead, Capitol South decided to knock down the mall and build a park. The group was inspired by similar projects, like Bryant Park in New York City.

A big lesson, said Worley, is that on its own, creating a green space isn’t enough. You needed to bring people there. So Columbus Commons has an outdoor stage and a café, and it hosts more than 200 events a year — many of them free — like yoga classes and concerts.

Developers are offering vacant malls to Amazon in HQ bidding war

Communities and owners of dying malls are teaming on the bid to attract Amazon’s new headquarters.  It’s a smart idea that would be even smarter if some housing was thrown into the mix to create a complete community in the process.

“As Amazon’s deadline for bids on where to build its second headquarters approaches, developers are offering up derelict malls as potential sites.

Pittsburgh’s Parkway Center Mall is exhibit A for the nationwide trend with the owner, Kossman Development, changing up their new plans to rebuild the former mall to suit the needs of Amazon.

The old mall’s 35-acre site would become a 5.4 million-square-foot office space surrounded by bike paths and green spaces with 680,000 square feet of retail spread throughout the would-be office campus. The developer’s president Curtis Kossman submitted the revised plans to the Pittsburgh committee handling the Amazon bid last week.”

Read the original story by The Chicago Tribune’s E.K. Hudson

When Lincoln Square was iconic

In 1964, when nine square blocks of historic homes and businesses were demolished for the construction of the shopping center and accompanying parking lot, Urbana was optimistic about the shopping center, hoping that it would revitalize its downtown area.

The Champaign-Urbana community is facing many challenges while seeking an elusive solution for the “dead” Lincoln Square Mall in Downtown Urbana. Designed in 1964 by Victor Gruen, and now designated historic and protected from demolition, few options are available. The solution lies in adaptive reuse that should aim for a variety of uses designed to spur innovation, excitement and foot traffic.

“In 2004, a plan to reintegrate Lincoln Square back into the downtown and redevelop the building with apartments, open space, and offices fell through. That same year it and the adjoining hotel were listed on the National Register of Historic Places, preventing its demolition and forcing Urbana to work around it when trying to revitalize its downtown. Thirteen years later, its future is still up in the air as Carle and Health Alliance recently announce that they are leaving the complex. Various plans to introduce apartments and modern retail space to the area have been proposed, but none have come close to fruition.”

Sears Was the Amazon of Its Time—Until It Made Preventable Mistakes

A customer enters the closing down Sears store is shown in downtown Vancouver.

Derek Thompson’s article for CITYLAB describes the rise and fall of Sears, and a cautionary tale for Amazon.  As the retail climate continues to shift, Sears’ properties, along with real estate holdings liberated by Macy’s and others during  the retail meltdown, offer prime opportunities for sprawl repair that can lead to complete and walkable communities.

 

“There are four broad lessons that Amazon can glean from the story of Sears’s decline.

 

  • First, retail is in a state of perpetual metamorphosis.
  • Second, even large technological advantages for retailers are fleeting.
  • Third, there is no strategic replacement for being obsessed with people and their behavior.
  • Finally, adding more businesses is not the same as building a better business.

But it’s important for Amazon to stay aggressive about experimenting with new platforms, in case one of today’s underdeveloped technologies—like ordering through AI assistants, delivery-by-drone, or virtual and augmented reality—turns out to be the next big thing that transforms retail, all over again.”

Like retail, it is important to be agile and creative in designing new communities and repairing suburban sprawl to meet the changing needs of Millennials and Baby Boomers.

 

Singapore needs to reinvent retail scene

The retail meltdown due to online competition and an overabundance of physical stores is now being experience world-wide. Retailers intent on survival will need to be lean, flexible and creative to stay competitive. But it will require more than just department store chains to participate in finding solutions for failing malls.

“STB assistant chief executive Lynette Pang once said: “In today’s fast-changing tourism and consumer landscape, we cannot stay still.” It is therefore crucial for landlords, retailers and relevant government agencies to think “out of the box” to allow new brands and exciting concepts to flourish and take shape.

Increasingly, the experiential factor is key in making a difference to Singapore’s retail scene. Shopping malls can reinvent themselves with unique experiential retail spaces that set them apart from the mainstream. For example, the opening of Jewel Changi Airport in early 2019 will distinguish itself as home to Singapore’s largest indoor garden and the world’s largest indoor waterfall, featuring a light and sound show every night to enable visitors to shop, dine and play in one place. The new Funan DigitaLife Mall, set to open by end-2019, will be the first commercial building in Singapore to allow cycling through the building, and have rooftop farms that offer visitors a rest from the urban crowd.

With such unique and activity-based retail zones, landlords are better able to make their retail spaces break out of the homogeneity among retail malls.

How Grocery Giant Aldi Plans to Conquer America: Limit Choice

Zeke Turner of The Wall Street Journal describes Aldi’s “unlikely proposition” to win over “spoiled American shoppers”. Their strategy of offering a very limited selection of high quality products, combined with rigid overhead cost control and a no-frills atmosphere, is attracting people from all socioeconomic levels. It offers a lesson for struggling American grocers and retailers as they combat dying malls and competition from online retailers:

“It offers a deliberately pared-down selection, sometimes a tiny fraction of the number of items sold by rivals, which helps Aldi cut costs to levels U.S. grocers can only dream of. Among other benefits, fewer items means faster turnover, smaller stores, less rent, lower energy costs and fewer staff to stock the shelves. That parsimony enabled Aldi to establish itself in Europe and then launch into the U.S.”

“By keeping costs low, the Spartan assortment allowed the founders to sell their inventory for less and turn it over at lightning speed, boosting profit margins, according to former executives.”

One of Aldi’s strengths that has eluded many discounters is its ability to draw middle-class shoppers–those with more money to spend–despite its limited array of goods. It did this by cultivating the image of a company focused on quality rather than pinching pennies.

“Poor people need us, rich people love us,” Theo Albrecht used to tell executives, according to Mr. Brandes, the former board member.

Read the original WSJ article here.

Mall owners take a pay cut amid brick-and-mortar struggles

 discusses a Wall Street Journal article by Peter Grant on declining compensation for mall owners due to a correction to the over-built retail environment and a result of the shift to e-commerce.

The Great Recession helped accelerate a natural correction, experts say. Last year, retail analyst Jan Kniffen, CEO of J. Rogers Kniffen Worldwide Enterprises, said that while America at the time had about 1,100 enclosed malls, that number should be around 700 — meaning that roughly a third are destined to close.

Those remaining will likely be robust, according to Nick Egelanian, president of retail development consultants SiteWorks International. “In a strange twist, however, the smaller number of malls that remain operating when the dust settles will become virtually indestructible by offering only best-in-class higher end merchandise in exclusive collections.  We already know who the winners will be, and the vast majority are owned and operated by four REITs: Simon, Westfield, Macerich and GGP.”

Incremental mall retrofits and sprawl repair can be the key to which malls succed.

MACY’S LOOKING TO MONETIZE UNUSED PARKING LOTS

The 11.4 acre Macy’s-owned portion of Landmark Mall. Howard Hughes Corporation acquired the Macy’s parcel and has begun to transform the enclosed mall and the Macy’s parcel into a vibrant open-air, mixed-use community with retail, residential and entertainment components designed to create a dynamic urban village. Image: Howard Hughes Corp

“Struggling retailer sees opportunities to improve shopping experience by activating empty parking lots.

As the images of empty parking lots during Black Friday have demonstrated, commercial real estate professionals are slowly warming to the idea that we have far too much parking than is needed- diminishing municipal tax bases and taking away the ability to lease space within struggling shopping centers. Big box retailer Macy’s has announced their intention to create new revenue streams by reimagining acres of unused parking lots- a strategy used by tactical urbanists in places like Nashville, Indianapolis and Miami.”

What to do with dead malls?

Anson Burtch writes about the escalating “retail apocalypse”, and successful options for the failing model of enclosed retail space surrounded by acres of parking.

“From a land-use perspective, dead malls are full of possibility. They occupy large swaths of often valuable land at crossroads or central locations with access to public transit and highways. When they were originally built, the land was frequently at the growing edges of suburbia but has since grown considerably in value by virtue of surrounding development and transportation improvements. This makes even dead malls valuable “land banking” assets for their owners.  In addition, the considerable volume of unencumbered raw space that is found in a typical anchor store makes them quite flexible for adaptive reuse. The desire and attention to revitalizing these areas has become a top priority and focus for local governments.”

“Luckily there are many options for revitalizing these properties. Remodeling as mixed-use developments has proven successful in many instances, and even more so when tied into transit systems. Other times finding unique tenants such as local governments, hospital systems, or libraries makes profitable and efficient use of the space. With a little creativity and a lot of willpower, communities can turn a potential unproductive eyesore into opportunity.”

Find tools for mall retrofits and more, in the Sprawl Repair Manual.

Brick and Mortar Reborn – The Future of Retail in the Era of Urbanization

The trend toward urbanization is inspiring retailers to focus on the holistic customer
experience.

An August 2016 White Paper by Synchrony Financial in collaboration with Quartz creative services discusses Urbanization and the Consumer, as well as strategies for competing with growing E-commerce.

“EXPERIENCE-DRIVEN RETAIL: THE RISE OF FLAGSHIPS, CURATED SATELLITES, POP-UPS, AND CONCEPT SHOPS

Urban consumers strongly favor the in-store shopping experience—with an emphasis on the experience. Eighteen percent of urban millennials expect to shop more in stores in the coming year than they did the last. When they do, they expect more than just a transaction. They want a unique experience that differentiates their spending and are willing to pay, on average, 31.6% more for it.

From flagship stores to short-lived, curated experiences, the future of retail involves meeting shoppers on their own terms—in the physical spaces they prefer.

The spread of city culture and denser living means customers are willing to pay more for brands that sell experiences—that sell a lifestyle—as well as provide on-demand convenience.”

These same strategies can be aimed at all ages and populations, and should be applied to Mall Retrofits in suburban settings where the decline of aging malls continues to drive down surrounding property values.

Can Australia avoid the death of local malls?

Abandoned Malls by Seph Lawless-Source-Supplied

As Amazon nears offering service to Australia, Economist Jason Murphy hopes Australian malls can avoid the current American syndrome of dying malls. He offers the following suggestions that can also offer hope for our American malls through Sprawl Repair and Retrofit:

“Number one is probably to reduce their reliance on risky “anchor tenants”. Coles, Woolies, Target and Big W are shopping centre stalwarts, but none of them is certain to still be succeeding in a decade’s time. One or all of them could find the going a lot tougher in a world where Amazon is trying to win over our wallets.

The next big idea for shopping centres is to offer experiences not just goods. Amazon sells stuff you can get delivered to your door. But experiences — haircuts, manicures and massages; meals, coffees and movies — are still things people want to meet in person for.”

By increasing density and diversifying uses, dying malls can become innovative employment and social hubs that enrich the surrounding neighborhoods.

Time to think about taxes for the Bristol Mall

Bristol Mall Image by Zack Irby:BHC

The Editorial Staff of the Bristol Herald in Bristol, VA is seeking to raise public pressure on local officials to find a solution to the dying Bristol Mall in their midst:

“We’ve previously discussed ideas and the need for action for our “skeletal mall.”

“This might all imply prevention of the mall’s slow death is a civic issue, but it’s not. All of us citizens who share a hope to see the mall, built in 1976, thrive for another 40 years also have an applicable duty. We should collaboratively raise awareness and a sense of urgency to move on this.

Let’s try an experiment: Let’s all call and write the city’s leaders within the next two weeks, asking what’s being done to fill the mall and to explore these kinds of options.

If each reader makes the effort to simply ask questions, the strength-in-numbers concept would make the topic too relevant for our local government to ignore.”

Read more about their investigations into retrofitting their mall, and the success Sen. Tim Kaine, D-Va., experienced in Richmond during his time as mayor there.

Malls are doomed: 25% will be gone in 5 years

Single purpose mall surrounded by a sea of asphalt

 

Chris Isidore of CNN Money writes, “Store closings and even dead malls are nothing new, but things might be about to get a whole lot worse.

Between 20% and 25% of American malls will close within five years, according to a new report out this week from Credit Suisse. That kind of plunge would be unprecedented in the nation’s history.

In 1970 there were only 300 enclosed malls in the U.S., and now there are 1,211 of them. In fact, despite the recent turbulence in the retail industry, the number of malls open has actually edged higher every year.

Repaired mall with vibrant 24/7 mixed-uses, increased density to support retail and entertainment, and beautiful, functional stormwater and local agricultural systems

 

If the analysts at Credit Suisse are right, that trend line about to turn — sharply — in the other direction.

According to Galina Tachieva, “Each store closing, and every mall mall that dies,  increases the urgency to return jobs and halt declining real estate values. Sprawl Repair through repurposing of dying malls offers a logical solution to create vibrant live-work communities where infrastructure is already in place.”

Learn more here.