With the fall of the mall came the rise of the strip mall. Macy’s is the latest retailer to announce it is expanding its outdoor mall presence with the smaller footprint Market by Macy’s and Macy’s Backstage concepts.
But why exactly have malls become so popular, especially during the pandemic?
The retail world has its own food chain. Commercial real estate investors tend to pour money into what retailers want. Retailers tend to pour money into what consumers want. And Christine Bonia retail analyst at Moody’s, said what consumers want are low-stakes, low-commitment purchases.
“The walking distance from where you park, how to get to the store itself, how easy it is to get to. Those things are just a lot more conducive in a strip situation than in a mall,” she said.
Malls make it easier for people to get to and not just buy, but also return items. And they can also lend themselves to not intervening at all.
“I think one of the big drivers is definitely the acceleration of online shopping, curbside pickup,” said Brandon Svec, director of retail analytics at CoStar Group.
Curbside pickup has become one of the business features of the pandemic. Svec’s proof that it is boosting interest in malls? The current mall vacancy rate is 8%, he said.
“It’s well below even pre-pandemic levels and it’s at its lowest level since before the great financial crisis.”
But not all malls are created equal; there is an equation that makes them work. Conor Flynn is CEO of Kimco Realty, which owns approximately 570 outdoor shopping centers across the United States. A good mall starts with a good anchor tenant, he said — big names like Macy’s or Target that drive traffic and reliably pay rent.
“And then what you do is try to have a coffee, the best bagel in the morning. You know, the best sandwich shop for lunch,” he said.
Then add a gym, a hair salon, an urgent care center, “and you continue to build a suite of services that will drive traffic at any time of the day.”
It used to be that malls were all about getting to a destination, socializing, or having some sort of experience. Now it’s more about checking everything on your to-do list.
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