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C+CT

The broad and varied public opinion about mall reincarnations

February 17, 2021

Social media platforms lit up when SCT published Malls aren’t going extinct. They’re adapting in December. Here’s what ICSC members and industry pros have to say about the topic.

The shopping center industry is resilient, said Top Cats broker of record and CEO Kelly Laughton. “Many existing malls have much to offer and can become highly productive mixed-use redevelopments,” she posted on ICSC’s LinkedIn page.

Malls with vacancies can find a new equilibrium with other uses, said Greensfelder Real Estate Strategy managing principal David Greensfelder. “Retail space that isn’t needed will be repurposed to other uses whose occupants represent new/incremental demand for the retail that is left,” he posted on LinkedIn. “Malls represent excellent repositioning opportunities!”

Malls have a vast capacity for evolution, former Kohl’s planning and design executive Amy Keltner posted on LinkedIn. “The ‘recycling’ of the built structure for alternate function is fantastic. We can certainly evolve without form extinction.”

It’s all about the landlord finding the highest and best use for the land, DataPoint International senior vice president RL Thatcher posted on ICSC Virtual Community’s Mall Reincarnations Group Chat. “These assets must be evaluated from a long-term perspective, often spanning decades,” he posted. “At issue is the greatest returns for the longest period of time. Conversion to warehousing seems to be in vogue,” he wrote, but converting to warehouse means lower rental rates and a lower value for the property, as well as possible violation of loan covenants, so it’s not always an easy decision for owners to commit to, Thatcher added.

Data Solutions principal Terry Munoz wrote on SCT editor-in-chief Amanda Metcalf’s LinkedIn post: “Finding alternative uses will be the trend in retail. The question will be the financial impact nonretail use cases will have on the long-term value of the asset. From an owner’s perspective, ‘some’ income is better than none given the available inventory on the market. Just hope lenders don’t start calling loans.”

But what will it look like?

Malls are reinventing themselves in a big way, Coniq chief growth officer Lance Mercereau wrote on LinkedIn in December. “It is going to be exciting to see next year the innovations coming from this investment.”

Commenting on LinkedIn, KXLY account executive Mike Ferguson wrote, “A ‘revolution in consumer experience’ is a more appropriate term” than “extinction.” “Malls and brick-and-mortar retailers made it easy for people to shop online with bad parking, long lines, boring atmosphere and terrible customer service. This is all changing for the good now with improvements in all those areas,” he posted on LinkedIn. “The next step is communicating how the consumer experience has changed. Then people will love to come back to brick-and-mortar instead of seeing it as a chore.”

The future will be omnichannel, said Engel & Völkers broker Guillaume L'Ecuyer. “Going ‘click and pick’ is the biggest untapped opportunity,” he posted on LinkedIn.

SiteWorks president Nick Egelanian was less optimistic about the future of the format. “The 100 to 200 malls that survive this secular decline will be the rare exceptions that have fully converted to fashion and other discretionary spending merchandising and will still require billions to retool,” he wrote on Linkedin. “By the way, internet retail, which accounted for 10.9 percent of U.S. retail in February 2020 (equaling the share of catalog retailing in 1994), has had little to do with this. The reason is almost 100 percent category killer ‘commodity retail,’ starting first with Toys R Us and later extending from Jiffy Lube to Best Buy, Walmart, Costco and everything in between. One by one, ‘departments’ in full-line department stores were decentralized, prices were lowered, choice was increased and, equally important, shopping was made more convenient. Amazon had little or nothing to do with it; the damage was mostly done before Amazon and internet buying were even a factor in retail.”

An increasing number of traditionally mall-based retailers are considering locating their stores to open-air centers, but DLC Management Corp. vice president of leasing, training and development David Horwitz doesn’t think the best malls are going away. “This is the continued evolution of our business,” he said during a LinkedIn Live Career Talk for ICSC student members. “We look at enclosed malls as A, B and C malls by the dynamics and sales per square foot they generate. The A malls are wonderful places to go. They provide a great deal of tenants that people want to shop at, but they’re community centers. People love the sociability of being able to walk through a mall and interact with other people and experience things, so I don’t think they’re going to go away.”

Still, not every mall will be able to compete with open-air centers, as retailers have become more open to the format since the onset of COVID-19, Horwitz added. “What’s going to change and continue to evolve is: People want convenience. They want goods and services. And over the pandemic, when enclosed malls were shut for so long and open-air centers were open, people’s shopping patterns changed. And retailers are now realizing where they thought was the only place they could sell goods and services is evolving. … They need to rethink how they do what they do to continue to change and meet the needs of the consumer.”

C-grade malls will have the toughest time adapting, Christopher Whittaker, a former planner for the city of North Port, Florida, wrote on LinkedIn. “The A and high-B malls have the resources to adapt. The others need to figure out how to reuse the parking areas and work inward.”

What do you think?

ICSC members are sharing stories, comments and ideas for malls on the ICSC Virtual Community platform and LinkedIn. We'd love for you to continue the conversations at the channels listed below.

Join the ICSC Virtual Community, and join the community's Mall Reincarnations Group Chat.

Follow ICSC on LinkedIn, and read more of the comments about mall reincarnations on ICSC’s LinkedIn posts from December and January.

By Brannon Boswell

Executive Editor, Commerce + Communities Today

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