Malls are continuously being faced with challenges in today’s retail climate— anchor tenants closing, chain stores trying to get out of long leases, stale food courts, online shopping, and consumers no longer making the trek. So how do you distinguish between Class A malls, which are still very much thriving, and the rest of the market encountering these hardships?
From a commercial real estate perspective, the sales per square foot is a strong indicator of what type of property class a mall falls under. The overall average for malls in the United States is in the $400’s—right now it is roughly $485/PSF. Typically, Class A malls are priced above the average range. The Class C properties, where most of the challenges are and where the situation will most likely worsen, will generally price below $350/ PSF.
As these challenges have mounted, Class A malls have led the way in reinventing themselves and remaining extremely relevant. A key part of this has been the embrace of experiential and interactive retail, not just in the form of traditional retailers that are using technology to personalize the shopping experience but by also increasing their food, beverage and entertainment options. All of these moves are ensuring that these centers are remaining vital centers of their communities. But this is not a movement just from Class A malls, but from the entire retail real estate sector as the market evolves in the age of newCommerce.
The food trend is not a new one, but creative, new food concepts coming into shopping centers are what’s being talked about and bringing the crowds. A good example of this is True Food Kitchen coming to Town Center Mall in Boca Raton, Florida. Their progressive and flavor-forward menu is rooted in vibrant, healthful entrees and snacks, and their scratch bar features fresh pressed juice cocktails and hand-crafted organic spirits. Entertainment facilities like new and improved 3D movie theaters serving plentiful dinner options or your favorite cocktail while you relax in recliners with 3D glasses are reviving the cinematic scene. And interesting niche gym concepts are bringing a whole new meaning to workouts within the retail environment.
Millennials, the largest consumer group in the U.S., are more interested in experiences than “stuff.” So, it isn’t surprising that malls with fitness concepts and cinemas are still doing well. Millennials still believe a nearby physical store presence is important when making online purchases. In fact, 59% of those surveyed agreed with this notion.
So, while we hear about store closures and malls left for dead with empty parking lots surrounding them, remember that this is not what we’re seeing nation-wide across all mall types, and there are a lot of exciting new concepts on the horizon to be explored.