Here we go again. “The Mall is Dead.” Again.
At least it is unless it reinvents itself, open-air center developer Rick Caruso told attendees at the National Retail Federation conference in New York City.
“Within 10 to 15 years, the typical U.S. mall, unless completely reinvented, will be seen as an historical anachronism, a 60-year-or-so aberration that no longer meets the public's, the consumer’s or the retailer's needs,” Caruso said.
It’s not the first time we’ve heard such declarations. Time Magazine famously declared “Kiss Your Mall Goodbye” in a May 1998 cover story, declaring that Internet shopping would kill brick and mortar. The internet and increasing urbanization of the U.S. population have in fact greatly affected B and C malls. The number of enclosed centers in the United States has dropped from some 2,000 at its peak in the 1980s to some 800 today. Weaker centers, such as the once-mighty White Flint Mall in North Bethesda, MD, will continue to close.
So bad malls, yes, have outlived their usefulness. But the survivors tend to be pretty good properties, and their owners are reinvesting in and reinventing them.
Look at what some of the major REITs are doing: Simon Property Group is in the midst of redeveloping and expanding more than 35 properties in the United States and Asia, spending about $1.1 billion. General Growth Properties plans or is redeveloping 54 projects for about $2 billion. Macerich has a $337 million pipeline of redevelopments in progress. Westfieldhas eight of its 39 U.S. centers undergoing major renovations or expansions (including the ground-up redevelopment of the World Trade Center retail), and 13 additional renovations/expansions globally. Taubman is renovating eight enclosed malls. CBL & Associates Properties just completed a swath of renovations, with three more under way, two coming up and more in the pipeline. PREIT is turning Echelon Mall in Voorhees, NJ, into a neighborhood.
Will all of these renovations/expansions succeed? We’ll see. But, much like a soap opera character who keeps coming back from the dead, I wouldn’t count the enclosed mall out.