Despite Good News, Malls Remain Sick

The outlook for traditional malls, which rely on an anchor store or three, is improving. This improvement though is due to several factors, including:

  1. nontraditional stores such as grocery stores leasing anchor space;
  2. expansion of home decorating retailers;
  3. lack of new mall construction.

These trends equally affect malls in diverse locations as the Dallas-Fort Worth metroplex to Toledo, OH. However, each trend should worry any savvy mall manager or commercial property development manager.

Grocery stores pose problems because they typically do not offer flow through access for people entering or exiting the mall, and maintain store hours that do not conform to mall hours. Other nontraditional retailers could find landlords who are willing to negotiate better leases and lower common area maintenance fees.

At Home's expansion could signal that consumers now possess sufficient money to resume home decorating activities. The company competes against churches instead of Home Depot or Pottery Barn for space. Churches pay very low rent, and remain a sign of a mall that is suffering. At Home's model appears closer to Steve and Barry's than Kirkland's.

Finally, developers continue to shy away from building new malls. The consumer base is no longer sufficient to justify building more retail space.

The middle class mall remains on its deathbed in America; although, seemingly healthy in Asia.

Future place of an At Home.