As e-commerce has blossomed and physical retail has faced headwinds since the Great Financial Crisis, malls have been thought by many to be in decline. However, a closer look at the data reveals a more nuanced picture, according to Newmark’s latest mall report.
Notably, monthly visits to Class A malls remained steady last year, and in some cases trended slightly upward. This growth outpaced that of lower quality malls, the report said. While foot traffic at Class A malls fell 2.5% between 2019 and 2024, Class B and lower-tier locations saw a steeper decline of 13.2%.
Meanwhile, foot traffic to neighborhood, community and strip centers (NCS) grew 2.6% over this period as they adapted to post-pandemic trends with features including curbside pickup and drive-thru options.
Between 2023 and 2024, Class A malls recorded a 1.7% increase in foot traffic, compared with a 0.7% decline in visits to Class B malls and a 1.6% increase in NCS visits. Foot traffic so far this year suggests continuing momentum, the total amongst malls growing 1.8% year-over-year in March, while open-air shopping centers experienced a 1.1% decline, according to Placer.ai data.
Newmark acknowledged that occupancy trends over the past seven years have been a challenge for the mall sector, but it noted that much of the pressure has been concentrated in Class B and lower-tier properties. Since 2017, Class B malls have seen occupancy drop 580 basis points to 90%, while Class C and lower malls have experienced an even steeper decline, down 1,050 bps to 84%, the study said. Class A malls, on the other hand, have reported occupancy declines of a more moderate 440 bps and are holding at about 94% occupancy, as of the first quarter of this year. Notably, Class A performance has kept pace with open-air retail, according to the report.
“These shifts are largely the result of retailers consolidating their footprints to create more efficient store networks,” said Newmark.
“Many brands that were previously mall-reliant are now targeting growth in open-air formats like neighborhood and community centers. As a result, closures have been concentrated in malls with weaker traffic and sales performance — placing Class A malls in a stronger competitive position and making them a preferred format for retailers adjusting their strategies.”
Occupancy and rents have been resilient across retail categories due to scarcity in new development. Less than 24 million square feet of new mall space has been delivered since 2010, said the report. Annual asking rents for Class A malls climbed from just over $24 per square foot to nearly $33 per square foot in 2024, marking a 36% increase.
To encourage this momentum to continue, Newmark encouraged increased personalization, a focus on collaboration between malls and retailers, adoption of artificial intelligence tools to enhance the shopper experience, and continuous reinvestment and re-imagination.
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