3. Class C malls are those that are struggling and at risk of becoming extinct.
They may contain sections of vacant
spaces and may even be considered a
negative draw for the region. In some
of these C malls, vacant space has been
filled with alternative uses (e.g., office
spaces, community centers, medical
office clinics or government agencies).
Trends are showing that most B and C
malls will struggle to survive as they
lose—or have already lost—one or multiple anchor tenants. Likely developed
with the first generation of malls, their
locations were once the prime retail
places in their areas. Once super-re-gional malls appeared, the tenant mix
and sales of these B and C malls were
weakened and will continue to decline
as more online retailers impact department store sales.
GIVING RETAIL SPACE NEW PURPOSE
According to the National Retail Federation (NRF) and data from the U.S. Census
Bureau, online retail is projected to grow between eight to 12 percent, suggesting that
e-commerce sales will reach between $427 billion and $443 billion. As the online retail
growth continues to chip away at the traditional brick-and-mortar market, the class
B and C malls are attempting to bring in more diverse tenants and offer experiences
beyond just shopping. These malls may be redeveloped into lifestyle, entertainment,
power or outlet shopping centers, which require redesigning and rebuilding all or most
of the existing structure. Another alternative—especially for malls that are owned by
REITs, property funds and institutional investors—is to demolish these struggling
malls and build more mixed-use developments that include retail but with an emphasis
on community integration.
Large stores may be subdivided into two or more stores and stores-within-stores and
kiosks that can create a market square area within the mall or shopping center. Traditional anchor tenants may be replaced with service businesses and warehouses (e.g.,
Costco Wholesale or Sam’s Club), state-of-the-art multi-screen theaters, fitness centers
and traditional or ethnic supermarkets. The new additions of these non-traditional
uses—e.g., healthcare services such as optometry, dentist, physician groups and urgent
care clinics—will generate greater traffic and require higher rent. In addition to these
non-traditional uses, malls and other forms of shopping centers are dedicating more
spaces for restaurants and other food purveyors.
Extending beyond the shopping spaces, more public and green areas are being
added to existing malls and shopping centers to attract people and keep them longer.
In addition to non-traditional uses, shopping centers are
dedicating more spaces for restaurants and other food purveyors.