Vacant Palm Beach Mall. (Photo by: Jeffrey Greenberg/Universal Images Group via Getty Images)
Universal Images Group via Getty Images
by Alyssa Rinelli
Welcome to the grand spectacle of American consumerism—where shopping malls resemble ghost towns after a particularly spirited Halloween party. Sales are down, foot traffic resembles that of a deserted island, and the only thing thriving is the echo of your own footsteps.
In a valiant attempt to survive the double whammy of e-commerce and COVID-19 restrictions, some malls have decided to swap sandals for delivery vans, converting retail space into mini-fulfillment centers. Yes, because who wouldn’t want their shoe store turned into the local Amazon drop-off? Nothing says “retail therapy” quite like being surrounded by packing tape.
Foot traffic in malls plummeted by 27% last year compared to 2019. It’s no wonder that major mall operators, like Washington Prime Group—who owns over 100 malls—are now filing for Chapter 11 bankruptcy like it’s the latest fad. Oh, the irony! Who knew that “store closings” would become the modern equivalent of “we’re adding more flavors to our ice cream lineup”?
On the flip side, e-commerce sales are on the rise, projected to grow another 18% this year, according to eMarketer. What’s the plan? Malls are now cashing in on this online goldmine by transforming themselves into distribution centers. Because nothing screams “retail revolution” more than a former J.C. Penney housing a fleet of delivery drones.
According to a CBRE analysis, this real estate metamorphosis has accelerated since 2017, with a whopping 60 retail-to-industrial projects sprouting up. Talk about a glow-up! We’re converting 14 million square feet of retail space into 15.2 million square feet of industrial space. It’s almost poetic—like taking a night club and turning it into a warehouse for overstocked inflatable flamingos.
Experts like Chris Maling, of Avison Young Inc., head of Retail Capital Markets, assure us that this trend is “how we can make these assets valuable.” Because who wouldn’t want to make money off the former home of Aunt Edna’s shoe sale? Forget the deep discounts; how about you adopt your local mall’s abandoned space for a less-than-happy fulfillment operation?
Companies like Amazon, DHL, and FedEx are eyeing these vacated mall spaces as strategic distribution hubs. So, if you’re looking for nostalgic mall memories, you might have to stroll through shipping containers instead of your favorite department store. How charming! Amazon has transformed 25 mall spaces into gleaming distribution centers since 2016—yes, 25 buildings are now crammed with packages rather than shoppers! Think of it as a shopping spree where everyone walks out with a box instead of a shopping bag.
In this chaotic dance of retail reinvention, old school and new school retailers are grabbing mall real estate like a limited-time offer. Traditional retailers like Target and Costco are swooping in too, turning prime retail space into online order fulfillment centers. Talk about cutting out the middle-man—why rent a warehouse when you can make a mall work overtime?
According to Maling, we can expect to see a wild mix of uses in malls over the next three to five years! Luckily, it will be somewhere between a bustling hub of engagement and a depressing wasteland. So whether you’re seeking out the latest gadget or just want to drop off your Amazon return, the mall of the future might have a little something for everyone… if you’re lucky.
For all those retailers clutching their mall space with hands of desperation, there’s hope! The omnichannel retailing model is gaining ground, making malls valuable nodes for checkout processes that people lovingly call BOPIS (Buy Online, Pick Up In Store), and BORIS (Buy Online, Return In Store). You might find yourself confused, but at least you’ll have something to do when the mall food court is closed!
At the end of the day, we’re seeing two extremes in malls. You can either look at a showroom model with zero inventory—where shoppers are more like casual visitors—or you can swing the opposite way and see them transform into fulfillment centers. So, if you’re pondering which future to embrace, welcome to the world of retail where agility is the name of the game, and those outmoded shopping habits are being lifted into the digital stratosphere.
