Philadelphia's King of Prussia mall, currently under rennovation by its owner, Simon Property Group.
Photo courtesy the Montgomery County Planning Commission.
I have a theory. If you watch a lot of television on an actual television, you probably also spend a lot of time in shopping malls.
Why do I think so? There are a few reasons. You are likely to be older, which is why you don’t watch your video entertainment on your phone – or simply use your TV as a conveniently large screen for streaming your Netflix program of choice via Chromecast, Fire Stick or Roku.
Being older, you also probably have not migrated as much of your commerce to the online world as have millennials and “post-millennials” (in other words, teenagers). Chances are, however, you are catching up fast in this area.
Finally, though this correlation is not as tight as the others, being older means you probably have more disposable income than young people who must pay off student loans while on the lower rungs of the career ladder. All of these factors make you a prime candidate to spend time in so-called “A++” malls.
The A++ ranking comes from Green Street Advisors, a real estate research firm, and only three dozen malls make the grade nationwide. These malls include some of my favorites, such as the Lenox Square mall in Atlanta and Westfield Century City mall in Los Angeles. The Westchester, a mall located in the New York county of the same name, is also a likely member of the mostly private list, based on its high sales performance.
You don’t visit places like these to save a few bucks on a new pair of shoes – just as you don’t go to the local multiplex theater to secure the best possible cinematic bargain. These are destinations. You go because you can do a few things that you enjoy, or maybe things that you can tolerate while your companion enjoys them, in a relatively pleasant atmosphere.
The bifurcation of the mall economy reflects the bifurcation of the real economy. A small share of the population with a lot of disposable income can afford to spend a slice of that income for pleasure. A much larger group, which needs to stretch their dollars as far as possible, has an expanding and much more efficient suite of options for pursuing value on the Internet. And when saving money is a priority, affluent people can – and do – use those options too.
Unlike some, I do not think this bifurcation is necessarily a bad thing. For most households, getting the most out of every dollar is important. Not having to pay for the overhead expenses that come with even a decently maintained mall provides a significant savings, not to mention the convenience of an expanded inventory and home delivery. That is why the overall number of malls in this country is shrinking, even as the select few at the top are renovating and expanding.
Whether or not economic bifurcation is good, however, it provides a clear explanation for what is happening to American malls. Conventional wisdom holds that malls are dying – and for lower tier malls, that perception is true. Green Street Advisors estimates that about 15 percent of existing U.S. malls will close in the next decade. And new malls are rare; only six have opened since 2006.
It is an open question how these old dead and dying malls will be repurposed in the future. Since many of them occupy high-traffic spots near transit arteries, they may one day make good work spaces, hotels, convention centers or mixed-use projects that include residential developments. We will have to wait and see.
In contrast, the owners of the most successful malls have not hesitated to spend large sums in pursuit of staying fashionable. Westfield Corp. is giving Century City an $800 million facelift. Simon Property Group, the biggest mall owner in the country by market capitalization, has said that it plans to redevelop or expand 29 of its properties here and in Europe. Such optimism is not without foundation, either. Simon’s share prices hit an all-time high last October, Bloomberg reported.
The high-end malls that do survive will likely look a lot more like today’s urban downtowns – just as old malls reflected the downtowns of yesteryear. Downtowns were once principally shopping destinations, until shoppers headed out to suburban malls instead. Today’s downtowns have largely been revitalized as entertainment and dining destinations, often aimed at those with the ability and inclination to spend on high-end experiences. Based on the trajectory of existing top-tier malls, those that survive will likely evolve the same way, focusing on luxury retail paired with popular dining chains, high-end services such as salons, and entertainment options such as state-of-the-art movie theaters.
The malls of 25 years ago, a collection of shops geared largely toward middle-class shoppers anchored by a department store such as J.C. Penny or Sears, are vanishing. But if you want a place to go to handle the latest i-gadget, where you can then walk a few steps to order a mochaccino, there is likely to be a mall for you for quite some time to come.