Shopping Malls Spending Big Bucks to Remain Relevant in Digital Era
Brick-and-mortar stores have been closing their doors in record numbers over the past several years, as they struggle to remain relevant in the era of online shopping. To lure back customers, many malls are spending significant dollars to reinvent themselves. Owners are adding new features, such as mini-golf courses and rock-climbing walls, as well as upgrading their food courts.
Mall operators, such as David Simon of Simon Malls, hope these new features and improved food courts will help increase foot traffic. Many mall visitors are now looking for entertainment instead of deals on clothes and electronics.
“We spent a lot of capital in the portfolio to upgrade the look and feel. We’re going to continue to do that,” Simon said. “I think the returns will be there, and I don’t think the dynamics of today’s current environment have changed that.”
Mall owners are desperate to bring in customers and new retailers as many of their anchor stores, such as Macy’s and Sears, are leaving to focus their efforts online. Green Street Advisors said that vacancy has risen from 7.9% to 8.1% in just the past three months. According to Bloomberg, as many as 13,000 stores could close next year, compared to 4,000 in 2016. Brokerage firm Cushman & Wakefield projects as many as 10,000 stores could close this year alone.
Many owners are using this exodus as an opportunity to reinvent their spaces. Chicago-based GGP, for example, has bought back 115 department stores over the last six years and redeveloped them. They have replaced less desirable stores with Best Buy, Nordstrom, restaurant-chain Dave & Busters, and health clubs such as Life Time Fitness.