The new Mall: Place to live, work and shopping
The team at Moody’s Analytics is continuing to study the impacts of COVID-19 on the retail sector, and their latest paper traces the trends in mall development leading into and coming out of the pandemic. How a relatively new type of mixed-use mall development has become central to the story of retail post-pandemic, and what the role of walkable spaces in American consumer life will be going into the future.
The Evolution of the American Mall
The story of malls in the 20th Century was a tale of adaptation to meet new technological and social trends. With the proliferation of cars and the move by urban planners toward highway development, malls replaced the thriving city centers that had been the beating heart of commerce for centuries. From the humble strip mall of the 1950s came “the indoor mall of the 1960s, ‘70s, and ‘80s, and then the power centers of the ‘90s and 2000s,” said LaSalvia. By the turn of the century, traditional neighborhood malls were the dominant retail space across the country.
However, beginning in the early 2000s, the ubiquity of e-commerce radically changed how developers looked at malls as online purchases took up an increasing share of retail sales.
The Pandemic Blip
Then the COVID-19 pandemic came, and with it an avalanche of predictions that brick-and-mortar retail would soon be a thing of the past. However, Moody’s analysis shows that, despite a spike in retail vacancies and the share of e-commerce sales during 2020 and 2021, the numbers have returned to the same general trend they had been on pre-pandemic. The pandemic had a lesser effect on retail than expected partially because landlords and property managers found more creative ways to keep tenants in place.
Consumers too are doing their part, with certain sectors seeing major increases in the wake of the pandemic’s darkest months. As time has progressed, there’s been a pretty dramatic shift in spending patterns, What we’ve seen is that the consumers have come back, and they’ve dramatically desired to get out and about. While sectors like grocery and drug stores remained strong throughout the pandemic, consumers have recently begun to prefer experiential retail experiences like dine-in restaurants as well as social gathering spaces like pubs and indoor rock climbing facilities. In short, post-COVID, people want to spend time around other people.
A Little City Center
One way of thinking about these new mixed-use mall developments is by comparing them with the organized convenience of a city street. My office is on this street, and so is my coffee shop, so is where I get lunch, and I can walk to these things, and my apartment is only two blocks away, so I’m walking to work, I’m getting coffee, shopping, getting lunch. Thanks to these new mixed-use mall developments and redevelopments, this option is being created for people that haven’t had it before except in big expensive cities. And that is ultimately helping retail in those areas.
After a century that saw retail development heavily trend toward a monolithic world of neighborhood malls, this type of walkable, vibrant retail setting is bringing back something that was once lost. We are, little by little, breaking down the traditional segmentation that zoning did for a long time in this country, forward, the retail ecosystem will have a diversity of inhabitants, from e-commerce giants to walkable mixed-use spaces to regional outlet and destination malls, all of which benefit one another symbiotically to provide customers with the widest possible variety of retail experiences.
To learn more about the trend toward mixed-use mall development, read Moody’s Analytics latest paper, The Brick-and-Mortar Retail Evolution: What’s Old is New.