The pandemic-induced renaissance of malls
For the last decade or so, malls have been dying. Surprisingly, the pandemic may save them.
The big picture: A year and a half of isolation has reignited a desire to gather in public spaces — and spruced-up, futuristic malls could make billions off of a cooped-up America.
- "The pandemic has definitely made people appreciate public spaces more, so there is scope for malls to capitalize on this trend," says Neil Saunders, managing director of GlobalData Retail.
By the numbers: About 25% of America's roughly 1,000 malls will close in the next five years, retail analytics firm Coresight Research projects. That continues a long trend of store and mall closures across the U.S.
- But the malls that survive the shedding will be relatively future-proof, experts say.
- "The malls caught COVID when the population caught COVID, and those that were fit and strong made it through," says Michael Brown, a partner in consulting firm Kearney’s Consumer Products and Retail Practice. "There’s a long future for the malls who are doing it right."
Thriving malls look more like downtowns than traditional shopping centers, with apartments, offices and restaurants.
- They're adding third workplaces: As we've reported, a key emerging workplace trend is the rise of places to work that aren't the office or the home. Malls are building such tertiary workplaces to attract teleworkers, Saunders says. For example, the Scottsdale Fashion Square in Arizona has incorporated office space through the co-working company Industrious.
- They're looking beyond retail: One of the fastest-growing types of mall tenants is doctors' and dentists' offices, according to a Coresight report.
- They're going local: One of the factors that killed scores of malls is that they offered the same set of chain stores no matter which town or city they operated in, says Denz Ibrahim, head of retail and futuring at Legal & General, the United Kingdom's largest owner of retail property assets. Ibrahim designed a new mall in Poole, an English coastal town, with hyperlocal tenants like a fishmonger and a gin distiller.
- With such local flair, malls can become post-pandemic tourist destinations, says Brown.
Bigger budget projects are taking it even further: The American Dream mall, a $5 billion project in New Jersey, was set to open at the beginning of the pandemic, and that was stalled.
- Now it has finally opened and is drawing crowds, not for its store, but for its amusement park-style rides.
The bottom line: Says Brown, "Malls need to be more than just a place to shop because frankly, we can just shop online."