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We can not blame American teens for not having gathered at the mall for generations: there are not many stores left.
In the past 48 hours, several mall stores have announced plans to reduce their footprint across the US. Gap Inc. has announced its intention to reduce the number of stores of its namesake brand in trouble by 230 over the next two years, just hours after JC Penney. Co. confirmed that it would close 18 department stores.
This news came shortly after L Brands Inc.'s decision to close 53 Victoria secrets in North America this year. And it's not just clothing: Tesla Inc., whose galleries are often located in shopping malls, has just said that it transfers all its sales online.
These movements apply to all channels that have already announced their closure or the reduction of their footprints due to bankruptcy. That includes Payless Inc., which has abandoned 2,500 stores, Things Remembered, which closes most of its 400 stores and sells the rest, while Brookstone Shopping Center's favorite narrows its operations and Sears continues to close its stores .
Overall, many of today's shopping centers are becoming little more than a collection of fashionable retailers, Apple stores and restaurants.
See also: Bad Victoria's Secret Christmas Means More Upcoming Store Closings
"You hear so much about the malls that are dying. In an interview earlier this year, Michael Guerin, senior vice president of leasing at Macerich Co., owner of the mall, certainly needs attrition and there are too many in the United States. The shopping center "just needs to evolve".
Vacancy rate
The narration of the dying shopping center is not new. The phrase "apocalypse of the retail trade" was introduced in the US lexicon a few years ago as the over-stocked suburbs and the steady gains of online shopping were gaining ground. But after a brief period of stabilization on the part of consumers – fueled by growing consumer confidence and low gas prices – it seems that another reform is needed for the sector.
The vacancy rate in US shopping centers was 9% in the fourth quarter, up from 8.3% a year earlier, said Barbara Byrne Denham, chief economist at Reis Real Estate Solutions, in a report on retail sector. Although Sears closed some sites earlier in 2018, resulting in an even higher 9.1% increase in the number of vacant locations in the third quarter, the "dark stores" did not have a price tag. affect the occupation of most shopping centers, according to the report.
Some shopping centers have found ways to adapt. Macerich – which has already begun offering 180-day leases to encourage pop-ups to fill empty storefronts – has added 32,898 square feet of collaborative workspace to its Scottsdale, Arizona shopping center , earlier this year. The two-story space is inside an old Barneys New York.
New tenants
Non-traditional tenants such as bowling alleys, movie theaters and digital Aboriginal brands are also found in shopping centers. The first online businesses, such as Warby Parker, Bonobos and Casper, are adopting what they call "offline".
"They need brick and mortar – we hear that loud and clear – when they open a store, their online sales go up," said Guerin, of Macerich. "Many of the stores you see now were not there five years ago."
In the fourth quarter, shopping center owners increased their rent by 0.8%, or $ 0.35 per square foot, compared to the previous year. They plan to redevelop some spaces for alternative uses – such as gymnasiums and entertainment spaces, says the Reis report.
Planet Fitness is a brand that benefits from retail store closures, as homeowners and REITs are increasingly approaching fitness center operators as potential renters. Even though retailers are looking to reduce their square footage, Planet Fitness can sublet space.
Related: Gap widens 'long-awaited' spillover plan to strengthen old navy
Planet Fitness CEO Chris Rondeau said his business was immune to the effects of e-commerce on brick and mortar, which would make him a good tenant of the mall.
"Our company can not be Amazon. We're not Amazon, "he said in an interview with Bloomberg Television," We do about 5,000 gym workouts a week, about 8 million workouts a week in the United States. we drive every day to these centers, and the majority of these visits are from Monday to Wednesday, most retailers are busy on weekends, so we are a great roommate for these retailers to generate this traffic. "
Different uses
Planet Fitness shows how shopping center owners, especially those with high-quality malls in high-traffic urban areas, use store closures to use spaces differently, said Lindsay Dutch, Bloomberg Intelligence analyst. .
"They benefit when they recover this space to turn it into something more experiential," she said. "They are trying to make offices, sometimes medical offices. From time to time there is a chance to put apartments there and go with something more residential. "
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