US Malls Stand Strong in the Retail Scene of 2023
In the realm of retail, characterized by terms like “resilient” and “steady” over the past two years, the commercial real estate (CRE) professionals dealing with retail properties have witnessed a notable performance. Despite the challenges, retail vacancies have hovered around 4%, with retailers innovating robust strategies that seamlessly blend online and in-person shopping experiences.
The enduring debate about the fate of shopping malls persists, with some declaring their demise while others emphasize the repetition of such predictions over the years. Amid conflicting views, the most prudent approach is to rely on data. According to a recent report from the foot traffic analytics platform Placer.ai, malls are demonstrating unexpected resilience in 2023.
Placer’s comprehensive analysis, available for download with a free sign-up, utilizes the Placer.ai Mall Index, categorizing malls into “Class A Indoor Malls,” “Open-Air Lifestyle Centers,” and “Outlet Malls.” Drawing on industry-leading AI and machine learning capabilities, the report processes data from 100 or more malls in each category to estimate overall visits to specific locations.
- Visitation Trends: Placer’s data reveals fluctuating mall visits in 2023, with a more than 10% spike in January for all categories, followed by a decline from February to May. A slight reversal occurred in July, but both indoor and outlet malls showed fewer visits thereafter. Open-air lifestyle centers, however, exhibited consistent performance.
- Demographics of Shoppers: The report indicates that all three mall formats attract a relatively high-income crowd, with open-air centers leading in attracting more affluent shoppers.
- Regional Variances: The western U.S. emerges as a hotspot for mall visits, with a 1.7% year-on-year increase from January to August 2023. In contrast, the Midwest experienced a 1.9% decline, and the Southern states saw a 3.2% decrease. Placer suggests potential shifts in 2024, with regions experiencing lower growth in 2023 possibly performing well due to pent-up demand.
- Urban vs. Suburban Demand: Urban malls saw a 3% year-on-year growth, while suburban malls experienced a 1.7% decline from January to August. Notably, both urban and suburban malls witnessed increases in unique visitors, with urban centers leading with a 7% increase.
- Shopping Patterns: The data highlights differences in consumer visitation patterns, with urban malls having a higher ratio of late-night visitors, while suburban malls witnessed increased activity on weekends.
In summary, the data presents a nuanced reality, emphasizing the enduring resilience of the mall sector. Despite evolving consumer behaviors, the assertion that “malls are dying” oversimplifies the complex truth. Placer.ai succinctly captures the essence: “While the function of malls has shifted in recent decades, shopping centers remain integral to the American retail landscape.”