Malls take drastic measures to find tenants, recruit doctors libraries and hospitals
Your mall may be getting a makeover. According to this Market Watch report struggling malls are taking drastic measures to fill empty retail space. So don’t be surprised, the next time you walk into your mall you may see a library, doctors office or a high school.
Beneath some positive stats, shopping malls are facing serious problems that threaten their health, including a shift to non-retail tenants and forecasted rent declines, according to Wells Fargo analysts.
Wells Fargo stresses a need to look deeper at high mall occupancy rates. Occupancy for the fourth quarter of 2016 was 93.6%, near the 93.3% for all of 2015, according to data from the National Council of Real Estate Investment Fiduciaries, cited by the International Council of Shopping Centers. However, the type of tenants many malls have is shifting to a lower-quality occupant for the overall health of the retail-focused mall, the analysts said.
“[F]or example, there are far more ‘mom-and-pop’ stores, and some malls have repurposed space for non-retail uses such as doctors offices, town libraries and even a high school,” Wells Fargo said in the report published Sunday. “Mom-and-pop” retail in a mall setting may generally be seen as a more-vulnerable long-term tenant and less of a traffic pusher without big-name brand backing.
Malls have been feeling the pain of the shift from in-store shopping to e-commerce. The latest numbers from the business data and analytics company NPD Group shows that e-commerce sales rose to 19% of total apparel sales in 2016, up from 11% in 2011.
While some of the blame for the e-commerce shift can be placed on consumer preference, another part of it is the in-store experience. Retailers have failed to give shoppers a reason to show up.