NEW YORK: US mall owners are having to reconsider their tenant mix amid a flurry of closures of department stores, traditionally their 'anchor' tenants.
A report by commercial realtor JLL, Empty to Alive: The Next Use for Department Store Space, noted that 300 department stores will close this year, putting about 36 million square feet of vacant space back on the market.
"In the United States nearly half of shopping centers' gross leasable area (GLA) is devoted to department stores, compared to less than one-third of GLA in the United Kingdom," said James Cook, Director of Retail Research at JLL.
"Retail space isn't overbuilt, it's under-repurposed. But that's changing fast."
JLL's report reviewed what has happened to recently vacated department stores and found that several large-format retail concepts fit well into former department stores, including restaurants, entertainment venues and grocers.
Traditional mall food courts were designed "merely as pit stops" for consumers to quickly refuel and get back to shopping, but nowadays restaurants are becoming destinations – and anchors in their own right.
Entertainment tenants are also playing a bigger role in shopping centers, as a number of movie theaters occupy former department store space. Children's theme parks like Crayole Experience and Kidzania have also taken over empty stores.
More surprising, perhaps, has been the emergence of upmarket supermarkets like Wegmans and Whole Foods to occupy vacated space.
It seems that the future of malls lies in creating a new mixed-use culture that not only embraces new retail formats, such as pop-up stores, but also new amenities, such as healthcare, that can make them community destinations.
"The best use for an empty anchor will vary and be dictated by the demographics and lifestyles of the surrounding community, but the many options available might come as a pleasant surprise," said Holly Rome, Director of National Retail Leasing, JLL.
Data sourced from JJL, Retail Wire; additional content by WARC staff