Experts Discuss What the Future Holds for American Shopping Malls

By Natalie Jones / 01.28.21 / 3 min read

Within the retail sector, businesses including grocery stores, personal service salons, and pharmacies have felt the effects of the pandemic. Some have been steady while others have suffered over the past year. One area of retail has been noted for its fluctuations in foot traffic: malls. A recent uptick in shoppers at malls across the nation was observed, yet retailers and developers have thought about if these shopping centers fit into long-term plans.

Research firm Placer.ai tracked visits to malls using cellular data and revealed that foot traffic decreased by 59.5% in March of 2020 when the pandemic began after reaching a peak in the previous month. April of 2020 marked a low point. Visits slowly increased over the summer as more Americans began to feel comfortable in public again, but the norm was still far away.

However, Placer.ai found that some of the most successful malls in the country actually experienced an increase in foot traffic during December of 2020. The reason? Holiday shopping. Many consumers opted for in-person shopping to grab gifts in the days leading up to Christmas. The National Retail Federation noted that over 150 million Americans planned to shop the Saturday before this holiday. It turned out that more Americans than expected decided to visit a mall rather than shop online.

Despite the rise in traffic at malls, retailers and developers question if investments at these shopping centers is the right choice at this time. With an inconsistent flow of shoppers, retailers such as Abercrombie & Fitch and Lands’ End plan to observe how consumer patterns form at malls plus brick and mortar stores before investing in shopping centers.

Developers visualize unsuccessful malls as potential office campuses, warehouses, or residential space. The rationale is that the abundance of land, typically the size of several football fields, creates opportunities for other uses. However, transforming the entire shopping center involves millions of dollars and years of seeking approvals and permits that may be jeopardized by economic factors over time.

Mall redevelopments can undergo a successful conversion, or they can become a warehouse. Some attract technology firms looking for an office campus. Others are eventually bought by the local government at a lower price to salvage value for future investors. Whether the buyer is the government or another entity, owners may have to significantly drop the selling price. Even if a mall is clearly struggling, a possible transformation presents tricky factors to navigate.

As the pandemic continues, evaluations of malls will consider foot traffic patterns along with the implications of investing or redeveloping the shopping centers. To read our sources, click here:

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