If you take a step back and place it within the broader macroeconomic context, the U.S. retail sector is looking better than the many apocalyptic headlines would have you think. That’s the message of Rhetoric vs. reality: Quantifying the long-term outlook for U.S. mall sales, a new report by QIC.

“When we looked around at the sector, most of the research was fairly isolated and piecemeal,” says Matthew Peter, chief economist at QIC.

The new report, which quantifies both tailwinds and headwinds across the sector, is aimed at filling that gap in the literature. As an example of a robust economic indicator, growth in consumer spending is a key element of the retail sector’s health, and all signs point to that measure continuing to stay on the rise. That creates a strong backdrop for retail performance, even as e-commerce penetration increases.

“There’s no doubt that e-commerce penetration is going to continue, going forward, almost as aggressively as it’s happened over the last decade,” notes Peter. “Our research also predicts that, at the same time, bricks-and-mortar sales will grow at a relatively healthy rate over the next 10 years.” He notes it is very different for a sector facing disruptions and restructuring to be coming off a robust macroeconomic backdrop, “which is what we’re seeing in the U.S. at the moment,” says Peter, than when it is undergoing those changes under very weak macroeconomic conditions.

Nominal U.S. consumer spending is forecast to grow at an annual rate of 4.3 percent during the next 10 years, and QIC estimates inline sales growth at class A and B malls will grow at an annual rate of 3.4 percent for the same period. In addition, consumer sentiment is the highest it has been in decades, according to the U.S. Conference Board Consumer Confidence Index, while the unemployment rate is the lowest it has been in decades, according to the U.S. Bureau of Labor Statistics.

“The better malls, and the ones that are going to be the enduring malls going forward, are reweighting their tenant mix away from department stores and apparel” — which currently account for 66 percent of sales at the average U.S. mall — “to a more balanced tenant mix,” says Peter.

This means more service-sector tenants, including more experiential dining and entertainment offerings.

Ultimately, lower-quality malls are likely to face potential closures.

Brian Delaney, a senior managing director with QIC, concludes: “The most successful malls will be those that transform themselves beyond a place of just shopping into a social town center where people want to be.”

Loretta Clodfelter is editor of Institutional Real Estate Americas.