Tomorrow’s shopping malls likely will not resemble the malls we see today. Consumer habits are shifting, and what made the original idea so appealing is now reversing course. Once desiring a communal place to gather and shop in the suburbs, consumers are now interested in a more organic experience. Over time, malls began to become mundane. And while they are able to draw people to tertiary areas, the vibrancy of communities now often suffers. In response, mall owners and urban planners have begun reimagining what the shopping experience should be.
You need to know where you’re from to know where you’re going
It is widely accepted that the idea for the modern shopping mall was hatched by European architect Victor Gruen and published in the magazine Progressive Architecture in 1952. Gruen noticed that the suburbs lacked what are known as “third places.” If home is the primary place and work is a secondary place, then a third place is a place to socialize: to build community, to hang out, to feel connected. Gruen wanted to give the American suburbs that third place. So he started designing the shopping mall. He crafted his centers to lure customers in by including eye-catching displays and adding air conditioning, covered walkways and extensive parking options. By the 1970s malls were a staple of retail and social culture, so much so that Architectural Record even claimed that malls were “more like downtown than downtown itself.”
Today, however, the structure of the modern mall is undergoing a paradigm shift. Consumer attention has shifted from wanting a place to hang out to wanting a place that is accessible and convenient — because time is more valuable than ever. Retail analytics firm ShopperTrak has reported steady decline in consumer mall traffic since 2011, with an average rate of decline close to 5 percent per month year-over-year. Next time you are inside a mall, do some people-watching. You will likely see a lot of elderly folks looking for some social interaction and young teens on retreat from adult supervision — neither demographic factoring heavily into retailers’ bottom line.
De-malling breathes new life into markets
In West Michigan, we have seen these trends start to reshape the market. For years, Eastbrook Mall in Grand Rapids struggled to attract the foot traffic that its big brother Woodland Mall drew, located nearby. Originally built in 1967, Eastbrook Mall featured roughly 50 stores with three prominent department store anchors. However, by 1990 many of the in-line stores had closed, and by 2000 the struggling mall was sold to an in-state developer with hopes of saving it. New owners rebranded the site Centerpointe Mall and added a few new and exciting tenants; however, vacancy continued to rise, and the center continued its descent into irrelevancy.
In 2007, mall ownership formulated redevelopment plans that included a shift toward more peripheral, pedestrian-friendly structures and more diverse tenants. The thinking was that fewer patrons were willing to walk around inside and that specialty tenants preferred the exposure that an exterior storefront creates. Those plans took a few years to come to fruition due to economic conditions; however, in March of 2012 the “de-malling” began. The redevelopment group utilized an ideal retail location and the vibrancy of a city coming strong out of the recession to convince a host of tenants that the site was about to make a splash. Exterior façades were revamped, interior space was removed (by almost half) and new out-lot buildings were constructed with impeccable street-front presence. Today, the now-named Shops at Centerpoint has a new footprint and is more than 90 percent occupied. Local experts from Colliers International continue their diligent work to fill what little space is left and expect to build on the momentum already created. When driving by, you will notice shoppers walking around, parking lots full and store managers grinning – all things that were absent a decade ago. Consumers have taken a liking to the new mall format, and the center is once again a relevant retail destination.
Other shopping centers in the West Michigan area have taken notice of the marked success of the Centerpointe Mall conversion and are planning to follow suit. Westshore Mall in Holland is about to undertake the same transformation, and Rogers Plaza in Wyoming will likely follow right behind. New developments like Tanger Outlets and Knapp’s Crossing will use the same storefront mentality to attract tenants and clientele, and others still are being planned.
So, where do we go from here?
The proliferation of online shopping and the streamlining of major retail establishments have made traditional anchor tenants harder to find. Without marquee big boxes to draw people, smaller tenants struggle. In addition, many categories of brick-and-mortar retailers that were once vital to the success of malls are simply beginning to lose relevancy. Book stores are being replaced by digital downloads, arcades are being replaced by at-home video game systems and comparison shopping at department stores can now be done from the comfort of your couch. Malls will need to continually search for new traffic drivers and a diversity of tenant mix in order to adjust to the new preferred shopping experience, with accessibility and convenience becoming as important as ever.
Going forward, the traditional shopping mall may not become extinct but could become an endangered species if owners and developers don’t continually evolve with the new reality. According to research out of the Georgia Institute of Technology, currently about one-third of traditional malls nationwide are considered dead and only about one-third of malls are considered truly healthy. To improve that ratio, reconfiguration and demolition are the likely solutions, but that will take time and investment dollars. Throughout the next few decades it will be interesting to witness how the retail mall landscape will continue to change and evolve. Because one thing is for sure: It has already started.
Jeff has a passion for West Michigan and enjoys being involved in its ever-evolving landscape. With research, property management, and brokerage experience, he brings a well-rounded real estate view to his role as Research Specialist at Colliers. Outside of the office you will find him on the golf course or near a lake. Connect with Jeff by email or through LinkedIn.