Casual Glance:
- The prices of open-air strip shopping centers, which saw a 13% surge since before the pandemic, are soaring past traditional malls that experienced a minimal 1% increase, as per Green Street's report.
- Malls have suffered the most significant property value drops among commercial properties since 2018, according to the report.
- Vacancy rates can explain this trend. Pre-pandemic, the average mall vacancy rate was 4.9%, which jumped 230 basis points to 7.2% in Q2 this year. In contrast, the impact on open-air centers was lighter - a 90 basis point increase at neighborhood centers, 80 basis points at power centers, and a mere 60 basis points at strip centers, as per JLL's report.
In-Depth Look:
Retail strip centers are surpassing conventional malls in growth as brick-and-mortar retail industry rebounds
Major retailers such as Gap and Sephora have moved away from conventional indoor malls to the strip centers preferred by Target, Kohl's, and Walmart in recent years. Even department stores, like Macy's and Bloomindale's, are shifting towards creating store formats tailored for strip locations.
The traditional department store anchor approach seems increasingly outdated, and malls themselves are seeking alternatives. Some new, mixed-use developments aren't even considering department stores as attractions anymore. This transformation has left its mark, with two mall Real Estate Investment Trusts (REITs) filing for bankruptcy last year, while Westfield announced its exit from the U.S market.
During the holiday season, non-mall stores reported a 38.9% year-over-year increase in traffic, far surpassing mall stores' 32% rise. During the Black Friday weekend, while there was an increase in store visits compared to last year, they didn't reach pre-pandemic levels, according to research from Placer.ai, which found a 8.5% decrease in indoor mall visits and 9.2% drop in outdoor mall visits compared to 2019.
Strong malls are also on the lookout for new opportunities, with Simon Property Group and Brookfield making investments in the retail sector itself, a move seen by some as an attempt to save leases and rents.
In a conference call with analysts last month, Simon Property Group CEO, David Simon, highlighted their company's growth despite the pandemic. He said, "We have unequivocally proven with our results year to date that we've overcome the arbitrary shutdown of our business due to the pandemic and our cash flow has bounced back dramatically, which many have doubted." He further emphasized Simon Property Group's advantages, including its sturdy balance sheet and unique business models.
- Amidst the shift, cybersecurity Policies for online fashion retail have become increasingly important, with AI systems playing a crucial role in protecting customer data.
- viewing the current cultural trend, there's a growing interest in integrating weather updates into TV shows and sportscasts, making them more interactive and engaging for viewers.
- In the midst of this transformation, research suggests that health concerns are driving consumers towards sustaining and eco-friendly fashion brands, further impacting the industry's future direction.
- Breaking away from the traditional, some malls are adopting a more diverse range of tenants, such as gyms, health clinics, and even co-working spaces, to boost foot traffic and appeal to a broader demographic.
- The research also indicates a preference for open-air facilities, which are seen as safer and more adaptable to new shopping patterns in the wake of the pandemic.
- On the other hand, the dropping property values of malls have caught the attention of investors looking to make a profit in the business sector, sparking discussion around potential revitalization strategies.
- With the shift in the fashion landscape, there's a growing debate within policy circles on the need for more stringent regulations to protect consumers and ensure fair competition among businesses in the industry.
