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Retail Center Occupancy Is High, with Sales Rising in Upscale Malls/Online Sales Hurt Stores, Business and Industry Trends Analysis

The largest enclosed shopping malls are sometimes referred to as “super-regional centers” (malls which include at least three department stores and at least 800,000 square feet of retail space.)  Such malls often contain more than 1.2 million square feet.
Other types of shopping center properties, such as power centers and lifestyle centers, have been developing rapidly in recent years, in many cases robbing traffic from traditional malls.  A “power center” is typically an open-air complex of category-dominant anchors such as category-killers, home improvement stores, discount stores and warehouse clubs.  A “lifestyle center” is an open-air, highly landscaped configuration of approximately 50+ stores.  Generally located near upscale neighborhoods, lifestyle centers offer leasable retail areas of 150,000 to 500,000 square feet, with at least 50,000 square feet of space typically dedicated to upscale national specialty stores such as Williams-Sonoma.
There are also hybrid centers, and value-oriented centers.  Hybrids have some of the features of enclosed malls and lifestyle centers.  That is, they have both open-air sections and enclosed sections.  Value-oriented centers are built on formats that emphasize discounted prices.  These include outlet malls.  Many new value-oriented centers feature significant entertainment segments.
The Coronavirus pandemic had a devastating effect on malls and retail centers of nearly all kinds, as consumers conducted a growing amount of their shopping online.  However, foot traffic increased substantially in late 2022, and is somewhat back to normal levels in many malls, especially those with multiple entertainment venues.
Many major chains took bankruptcy during 2020, including long-term department store giants J. C. Penney, Neiman Marcus, Stein Mart, Stage Stores and Lord & Taylor, as well as leading apparel sellers J. Crew and Brooks Brothers, plus home goods sellers Pier 1 and Sur La Table.  While many bankrupt firms gained new investors and resumed business under lower overhead and less debt, some liquidated and closed shop entirely.  This trend imposed immense financial problems on shopping center and mall owners.
By mid-2020 at least two major U.S. firms that own malls had taken bankruptcy.  This includes CBL, operator of 107 malls, and Pennsylvania Real Estate Investment Trust, operator of more than 20 properties.  Ironically, some empty store space around the U.S. is being converted into storage for delivery of merchandise sold via ecommerce. 
Despite a post-COVID bounce in foot traffic and shopping at many mall and shopping center locations, the traditional retail industry remains seriously challenged.  Trends that keep shoppers at home are now generally convenience based.  That is, buying online remains faster, more convenient and sometimes less expensive than shopping in-person.  The fact that home delivery of goods, especially groceries, also keeps shoppers at home.  Of course, there are safety advantages as well, since a contagious disease can be readily spread by a sneeze at a mall, and cars are often broken into at shopping centers.  Last, but not least, physical stores will never be able to match the depth of merchandise selection offered by ecommerce.
On the other hand, shopping gives consumers an excuse to get out of the house, perhaps meet up with friends, as well as see and try merchandise in-person.  Neighborhood strip shopping centers can also be convenient, offering the chance to stop in quickly for a few items, and take them home instantly.  However, the most successful operators of malls and larger shopping centers know that the key to maintaining foot traffic is combining entertainment venues and multiple restaurants with retail stores.
Meanwhile, marginal, poorly operated, or poorly located retail properties suffer.  Many end up repossessed by lenders, or even knocked down so that other types of buildings can be built to maximize land value.

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