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Challenges confronting regional malls intensify: A look at the three major causes of retail contraction
- September 1, 2017: Vol. 29, Number 8

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Challenges confronting regional malls intensify: A look at the three major causes of retail contraction

by Stewart Rubin

Within the spectrum of commercial real estate, no property type is facing such profound challenges as regional malls. U.S. malls are confronted by: (1a) income stagnation, (1b) income concentration, (2) retail oversupply and (3) e-commerce. The challenges are not distributed equally; high-end regional malls as well as dominant malls are well positioned to cope with the pressures. Conversely, these threats are not being met successfully in many demographically and economically challenged parts of the United States. Malls that focus on experiential tenants — discount retailers, theaters, restaurants, fitness centers, unique entertainment venues and medical outpatient services — that cannot be replaced via online stores and services will be at an advantage.

There are 1,035 malls in the United States, according to Green Street Advisors, which classifies 337 as being most at risk for closing due to such factors as declining occupancy and sales of $305 per square foot or less.

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