As the "retail apocalypse" rolls on, 2018 could see more retail space open up than any year before, according to CoStar Group data cited by CNBC. At least 94 million square feet of retail space will be closed in 2018, according to data released in April, already moving in on 2017's record of 105 million square feet, with much of the year still left to go. This surge was powered by the liquidation and closing of retailers like Toys "R" Us and Bon-Ton, with many more stores set to close soon.
With US mall vacancies hitting a six-year high in Q1 2018, malls are getting creative to fill their property. Given the struggles of brick-and-mortar stores, some malls are looking at nonretail options to take their place. One mall replaced a Macy's location with U-Haul to create storage space, while others have repurposed malls as offices.
The option of opening hotels and residential spaces appears to be somewhat popular, as mall operator Simon recently announced it would be opening at least five Marriott hotels at its properties in the coming years, while Pennsylvania Real Estate Investment Trust (PREIT) intends to add up to 10,000 residential and hotel units, CNBC reports.
Others are looking to pop-up shops to keep their offerings fresh in order to increase traffic. Simon and General Growth Properties (GGP) have both tested pop-up dedicated spaces that offer a rotating roster of brands, which is meant to encourage regular visits from customers since there will always be new products to discover.
The spaces are also meant to help e-commerce pure plays enter brick-and-mortar; Simon provides the e-tailers with fixtures, displays, and more, while GGP offered drop shipping so that brands didn't have to bring inventory to the locations. Recruiting digital brands can create a unique in-store experience that shoppers can't find anywhere else, potentially putting more space in malls to good use.
Although malls are wrestling with this vacancy problem, there are plans to build the biggest mall in the US in Miami, Florida, Business Insider reports. The mall, dubbed the American Dream, still needs a number of permits, but it has received final zoning approval and is planned to span 6 million square feet, according to The Miami Herald.
The mall will feature up to 1,200 stores, as well as a number of other attractions including restaurants, an ice skating rink, and a water park. While all other malls can't simply become a "destination mall" such as the American Dream, this move does demonstrate the belief that malls that offer interesting experiences can thrive. Therefore, other malls may want to find ways to create similar exciting offers on a smaller scale.