Malls Slim Down for the Holidays

Martin Drake, Bisnow National

A toxic mix of overbuilding, bankruptcies and e-commerce are putting a halt to US mall expansions, forcing shopping malls to cut their retail space this holiday season.

“The fact is that we built far too much,” Suzanne Mulvee, a research director at CoStar, tells the Wall Street Journal. By the end of '15, there will be 48.3 SF of retail space per person, a drop from the 2009 record of 49.8 SF, according to CoStar.

Landlords are converting the empty space retailers leave behind into hotels, apartments and offices to replace retail stores—with some adding parks to draw more retailers and shoppers, the Wall Street Journal reports.

While online shopping has doubled its market share since 2008, retailers like RadioShack, American Apparel and Wet Seal all sought bankruptcy protection this year.

The decline has affected most categories of retail real estate, including strip centers and convenience stores, local shopping centers and large malls, according to data from the International Council of Shopping Centers.

A tough bricks-and-mortar climate is forcing landlords to think outside the box—literally. In Texas, Terry Montesi, founder of Trademark Property Co, gave up 20k SF of retail space, putting oak trees in the middle of the development. “People will pay for the experience," he says. [WSJ]

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