Dive Brief:
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Depending on their anchor retailers, their overall approach, and mix of stores, many U.S. malls will continue to falter, according to real estate research company Green Street Advisors’ 2015 U.S. Mall Outlook.
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In a scenario that correlates with the income divide in the country, higher end malls will fare better in the next ten years than those in lower-income locations, according to a preview of the Green Street research by Fortune magazine.
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Retail sales at “better malls” could increase 3% in 2015, and closer to 1% at “B” and “C” locations, a widening gap that will continue to get wider, according to Green Street. Some 15% of the country’s 1,500 malls are likely to be shut down completely in the next 10 years, the firm says.
Dive Insight:
The American mall is at a crossroads, for sure, with some enjoying a rosy outlook and others dying. Each category is subject to its own spiral: Higher-end malls have success that breeds success, while struggling malls will continue to falter and empty as their stores falter and close.
“We expect far more malls to close than new ones to open,” Green Street senior analyst D.J. Busch told Fortune. “It’s circular. As malls get more productive, they are more in demand from new, growing retailers so it’s a virtuous cycle. Conversely for lower B or C malls, as they lose tenants, it’s harder to find quality replacements.”
