Between the ever-growing utilization of online shopping (across all categories) and the glut of retail space across the U.S., malls will not be able to attract and secure sustainable tenants unless the entire shopping experience is addressed. The mall itself needs to reestablish itself as a valued and sought-after destination. Additionally, retailers and brands need to create experiences and workflows that cater to today’s digitally-empowered shopper. What can you do to give your shoppers a reason to visit you as opposed to simply shopping online? That is the challenging question facing all physical store retailers and brands. Without solving or addressing this challenge, the cost of the square footage is irrelevant. To put this in context — PIRCH, a high-end appliance and plumbing retailer focused on customer service and a sensory immersive shopping experience, is being rewarded by revenue exceeding $3,000 per square foot.

I’m surprised there isn’t anything healthcare-related in the list of potential mall tenants. I know fitness centers are going into malls as anchors or sub-anchors all around the New York metropolitan area and beyond. And while there are certain zoning issues related to clinics, rehab centers, nursing homes and the like in many areas, these laws are bound to change in time.

No doubt. If you want to see the future of the mall, just spend some time in LA: visit older department store-less versions like Third Street Promenade or the newer ones like The Platform or Pacifica, or even The Grove (with only a Nordstrom) where Nike is really the anchor. With tenants like the ones they have, who needs the old model?

The new mall is really more about mixed use than anchors — food, music, entertainment and oh-by-the-way, retail.

Malls need to think creatively about becoming a true destination experience that people want to come to, not just to shop but to experience a fun afternoon. This means malls need to rely on more than traditional anchor stores. Entertainment options should grow in popularity as a driver for foot traffic. Stores, restaurants and other service types of amenities should be included in the overall makeup of the modern mall. If malls think of themselves as community destinations they will start to identify new tenants and begin to see a new kind of foot traffic. This may not be a fix for all malls — the lowest performing malls might not have a way to be saved as we still may have too many malls in the U.S. — but this new destination approach may save many of them. As a proof point to this new way of thinking, look no further than the plans Apple has for their stores — they won’t even call them stores much longer as they fully embrace the concept… Read more »

In an experienced digital native economy, there are ample opportunities for other stores, fitness outlets, restaurants and entertainment businesses to thrive. Simply put, for a long time now department stores have been unable to generate excitement and provide a reason for customers to shop in their outdated and stale formats. Not all of the malls are fated to survive. There are plenty of malls that will simply close due to many factors. If all the revenue KPIs are in place and the circumstances are right, then a thriving mall can evolve, survive and succeed in an experience-based economy where families are seeking new adventures. The department stores, as they are currently constituted, are unable to provide this. Perhaps this is the opening that the sharing economy can take advantage of in the suburban landscape. Without the pressures of long-term investments and leases maybe a retail pop-up based business model can take over these spaces and bring curated and unique smaller local vendor assortments for a limited time. This would create the excitement, uniqueness and exclusivity… Read more »

Malls can provide an ideal location for a new non-traditional tenant as the malls are typically well known locations and provide a gathering place for consumers of a variety of destination activities. Restaurants, home furnishings, cosmetics, spas and small businesses of all sorts would be willing to take space in these malls at the right price because of the attraction created by the mall reputation and diversity of stores.

There is still room for traditional department stores as mall anchors, but they need to be relevant to the consumer as well as consistent with the profile of the overall tenant mix. The old paradigm of two traditional stores, Sears and J.C. Penney, just doesn’t cut it anymore and is undergoing well-deserved “creative destruction.”

Part of the challenge for the anchors that remain is to spend some money on new paint, floor treatments and lighting! Even at a showplace mall like University Town Center in La Jolla, where Nordstrom is relocating to a brand-new building this fall, Macy’s in particular stands out as a bad example of lack of capital spending. You can only go so far blaming the “death of brick-and-mortar” on e-commerce if you’re not willing to keep your house in order.

The problem with malls is that they evolved in a different time and a different culture. They were part of great suburbanizing of the country. Things have changed. The automobile was the driving force. It is no longer. There are enlightening statistics on how young people are no longer in a hurry to get their driver’s license (down to 60 percent from my day when it was 100 percent). Real estate developments for young folks are specifically designed to provide all the access they need without stepping in an automobile.

Demographic changes are not going to be kind to the mall. That being said, if they are are going to change they must focus on attractions other than shopping like restaurants, movie theaters and activity centers. In the long run, they have to revert to a Main Street feel, as several of my colleagues noted — a community.

If department stores are going to be in the vanguard of store closings, which it appears they will be, it’s a lot of square footage to re-purpose. Add in some big box office supply and sporting good stores and the story gets more interesting. Yes some restaurants and fitness centers make sense — health care is interesting but frankly the likelihood is that those will be net transfers from other locations, not net new ones. While not entirely a zero sum game, in total it’s probably closer to being one than not. So all-in-all the retail/hospitality space is going to decrease and some malls won’t make it.