Malls Remodel to Boost Sales and Attract Shoppers/Store Visitor Counts Are Disappointing

The face of retailing continues to evolve quickly. Malls and their stores face daunting competition from web sites, giant discount stores like Target and wholesale clubs such as Sam’s. At the same time, a number of consumers have lost enthusiasm for frivolous shopping and needless credit card debt. Many mall redevelopments included luxury movie theaters with full menus and lounge seating, plus areas within the malls for children to play, along with open pavilions for live entertainment.

Top malls typically have more than 1 million square feet. Luxury stores such as Tiffany, Prada and Ralph Lauren help to draw customers. Shoppers also want cutting-edge technology stores such as those operated by Apple.

One way to attract customers is to raise the roof—literally tear off the connecting roofs between stores to create an open-air environment. Parking garages are coming down as well, so shoppers can park directly by the entrance of their favorite stores. Typically built to have a single floor, the stand-alone locations have plenty of close-in parking and offer shopping carts and centralized checkout stands for convenience.

Some operators of enclosed malls are scrambling to find alternative tenants to fill empty spaces. Walmart, for example, opened a two-story store in a mall in a suburb of New York City and a three-story location in a Los Angeles mall formerly occupied by a Macy's department store. The pluses for Walmart in these locations are access to mall shoppers without having to acquire real estate that is scarce in congested areas, as well as favorable leases with mall owners who are anxious to fill large amounts of space. On the other hand, Walmart faces increased security and logistics costs and the difficulty of having to switch from a single-floor sprawl to multi-story confusion. Costco is also experimenting with former department-store spaces.

Elsewhere, some malls and retail centers that are suffering from low occupancy and traffic have been leasing space to large, non-retail tenants in order to fill former department store sites. Tenants in marginal malls are morphing from strictly retail to include just about any entity that can pay the rent. Churches, government offices, schools, medical clinics and law firms are now often found in malls. Also, a number of cities are looking for cost-effective ways to use prime real estate that holds failing malls. Columbus, Ohio, for example, knocked down the City Center mall and built a park. Valley View Center in north Dallas, Texas was leveled in 2017, making way for a new $3.5 billion multi-use development of housing, restaurants and offices. At one time, it was one of the Dallas area’s most prominent shopping malls. The former Hickory Hollow Mall in Antioch, Tennessee, for example, is now a satellite campus of Nashville State Community College, with the city’s professional hockey team using the mall’s old ice-skating rink for practices. Highland Mall in East Austin, Texas also morphed into a campus, in this case for Austin Community College.

Ecommerce giant Amazon is turning empty malls into fulfillment centers. The company purchased the North Randall Park Mall and the Euclid Square Mall in Ohio in 2017 and completed reconstruction of both sites in 2019. Google is also working on a mall makeover in Los Angeles at the Westside Pavilion. The company is spending about $500 million to convert 584,000 square feet into what it calls “creative” office space to be called One Westside, was still under construction in 2023 after some construction delays in 2022.

A number of luxury shopping centers were announcing additions to attract younger, less affluent customers. This idea is to bring in Millennials to hang out and shoot Instagram photos now, in order to build a relationship for buying later. Bal Harbour Shops near Miami, for example, expanded from a previous total of 450,000 square feet to a new size of 700,000 square feet. High-end retailers including Gucci, Hermes and Brioni are building boutiques in these expanding areas to improve brand identity and have more space to showcase merchandise.

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