U.S. indoor mall vacancy rates will peak at just under 9% this year, at 7.8% for outdoor shopping centers and at 7% for power centers, according to Reuters reporting on JLL data. As recently as 2009, the average mall vacancy rate was 5%. The trend is accelerating as traditional mall tenants like Express, Lululemon, Macy’s and Signet Jewelers open stores in off-mall locations. Such moves offer cost advantages, too; average annual rent for non-mall shopping centers in the first quarter was $20.36 per square foot, a third of the average rent in top malls.

Consumers are returning to urban retail districts

Pedestrian traffic in U.S. downtowns strengthened in June for the fourth consecutive month, to 50.2% less than June 2019. That marks the best performance since the start of the pandemic, according to research firm Springboard. Activity has been trending upward on a weekly basis since the beginning of 2021. Traffic also improved week to week as June progressed; during the first week, it was 55.1% less than the same period in 2019, and in the last week of June 2021, it was only 47.3% less than the same week in 2019. The final two days of June 2021 were the Tuesday and Wednesday preceding July 4th weekend, and on these two days, the average downtown pedestrian traffic was 8.7% higher than the week before.

11 developments to watch

Structures Unlimited is building a multitenant retail center in Cleveland’s Hough neighborhood that will be named after the U.S.’s first Black female millionaire, Madam CJ Walker. It will serve as a hub to boost Black entrepreneurship. The developer plans to lease space to Black-owned retailers, including a bank, a supermarket and a community center.

A derelict truck stop at N.E. 23 Street and Rhode Island Avenue in Eastside Oklahoma City has become the EastPoint shopping center, tenanted by a nonprofit supermarket, a fitness center, a bar, a bookstore, an optometrist and offices. A pizzeria and coffee shop also will open soon. Each Black-owned tenant has the opportunity to include an equity stake in the building as part of its lease.

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The 300,000-square-foot luxury wing of Triple Five’s American Dream in Rutherford, New Jersey, will open in September with around 20 upscale tenants, including Saks Fifth Avenue, Hermes, Saint Laurent, Tiffany & Co., Dolce & Gabbana and Mulberry. More stores will open across 80,000 square feet within the next year and a half, according to the developer. The wing’s planned 50,000-square-foot Barneys remains unleased after the department store filed for bankruptcy protection and pulled out of the project in 2019. In another sign that luxury retail is in good shape, Chanel will open a beauty and fragrance boutique this fall at The Woodlands, near Houston.

Bally’s and a local partner plan to invest $120 million to convert the former Macy’s at Nittany Mall in State College, Pennsylvania, home to Penn State, into a casino with as many as 750 slot machines, 30 table games, a restaurant, entertainment space and sportsbook. The project would be one of several mini-casinos opening in vacant Pennsylvania mall space. Hollywood Casino York will open in the former Sears at the York Galleria next month, and Live Casino Pittsburgh opened in November in a former Bon-Ton at Westmoreland Mall.

Sembler has begun construction of the 65,187-square-foot, Publix-anchored Treaty Oaks Marketplace at State Road 207 and Brinkhoff Road in St. Augustine, Florida. It’s a quarter mile from three new developments that total 1,200 single-family homes. Southwest of the development site, 3,700 single-family lots, several million square feet of commercial space, hundreds of hotel rooms and a school are in planning and development.

East Millbrook LLC plans to build a 33,488-square-foot, two-level building on 2.9 acres near Quail Corners Shopping Center in Raleigh. The top floor will feature office space, and the ground floor will house restaurants and retailers. The developer plans to break ground by early 2022.

Costco will anchor The Legacy Group and Vestar’s 321,000-square-foot mixed-use Queen Creek Crossing in Queen Creek, Arizona, scheduled to open in September 2022.

SouthEast plans to renovate the historic Laura Street Trio — the Florida Life Building, the Bisbee Building and the Marble Bank — at Forsyth and Laura streets in downtown Jacksonville, Florida. SouthEast would spend $70.5 million to convert the vacant buildings, which went up between 1902 and 1912, into a 145-room Marriott Autograph Collection hotel with a 21,000-square-foot restaurant, a lounge, 8,000 square feet of ground-floor retail and a bodega-style grocery. The company has asked city officials for permission to break ground on the project in 2021.

McWhinney is working on a master plan for the redevelopment of the former City Hall complex in downtown Provo, Utah. The 4.5-acre lot will include dining, boutique retail, residential, entertainment and social gathering spaces. The developer plans to unveil its plan next summer.

Level 2 Development and SJG Properties are developing an $80-million mixed-use development on 3.3 acres in Richmond, Virginia, that will replace the current barbecue restaurant, Cort furniture rental company and a video production studio. The development will include 300 apartment units and 14,000 square feet of retail.

Construction is underway on Fountainhead Development’s 17-acre Monterey Crossing in Palm Springs, California. Phase 1 will include a 130-room hotel and 130,000 square feet of retail. Completion is scheduled for the fourth quarter. Chick-Fil-A and The Habit have signed on as tenants.

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