US Malls Still Firmly Part of the Retail Landscape in 2023
Ask any commercial real estate (CRE) professional working with retail properties to sum up the sector’s performance over the past two years, and there’s a good chance you’d hear words like “resilient” or “steady.”
Retail vacancies have stayed around 4% over the past year, and many retailers have developed robust new strategies to blend online and in-person shopping experiences.
At the same time, there’s been an ongoing conversation around the future of one of the retail sector’s staples: shopping malls. And while some sources have insisted that malls are dying, others in the know point out that we’ve been hearing the same story for years.
As always, when faced with conflicting views, the best strategy is simply to follow the data. As a new report from foot traffic analytics platform Placer.ai would have it, malls are showing surprising resilience in 2023.
Mall analysis
Placer’s report (which can be downloaded here with a free sign-up) analyzes data from the Placer.ai Mall Index, which breaks malls into three categories: “Class A Indoor Malls, Open-Air Lifestyle Centers, and Outlet Malls.”
In each category, data for 100 or more malls is processed using “industry-leading AI and machine learning capabilities to make estimations about overall visits to specific locations.”
Here are some of the highlights of that analysis.
Changing visitation trends
Overall, Placer found that visits to malls have fluctuated quite broadly in 2023, with a more than 10% spike in January (for all three categories) followed by a drop-off in visits from February to May.
Placer’s data showed a slight reversal again in July, but both indoor and outlet malls showed fewer visits thereafter.
Open-air lifestyle centers, however, have proven an interesting exception, showing generally consistent performance over and above what’s been seen in other categories.
Big spenders
The report also showed that “all three formats attract a relatively high-income crowd,” though open-air centers once again dominate in terms of attracting more affluent shoppers.
Placer adds: “Many of the top performing malls are located within relatively affluent communities… and attract the higher-income shoppers within those areas.”
Heading West
Many of the most visited malls also seem to be in the western US. By region, Placer notes that from January to August 2023:
- Mall visits went up 1.7% year-on-year in the West and 0.3% in the Northeast, while
- Midwest malls experienced a 1.9% decline, and
- Malls in the Southern states experienced a 3.2% decline.
Worth noting is that these trends may shift in 2024. Placer states: “Regions with lower YoY growth in 2023 could perform particularly well in 2024 as pent-up demand in the South and Midwest drives shoppers back to malls.”
Urban and suburban demand
Another factor examined in the analysis is how many visits malls received based on the urban/suburban divide. Placer notes 3% year-on-year growth for urban malls between January and August, while suburban malls slipped 1.7% in the same period.
Interestingly, however, both urban and suburban malls saw increases in unique visitors: Around 3% for suburban and a much larger 7% slice for urban.
The data also showed differences in terms of when consumers visited malls, with urban shopping centers tending to have a higher ratio of late-night visitors. Meanwhile, suburban malls saw higher trade on the weekends.
Diversity and resilience
While the above figures are something of a mixed bag, what they do show is the ongoing resilience of the mall sector – and ongoing demand from old and new patrons alike.
And while the way consumers use these spaces may be changing, the idea that “malls are dying” is a far cry from a much more nuanced truth. As Placer sums up: “While the function of malls has shifted in recent decades, shopping centers remain integral to the American retail landscape.”
