If you haven’t been to a mall recently, you are missing out on witnessing a fundamental change in the retail industry.
Stores are closed, and their inventory is off the shelves, especially for more expensive items, or locked behind gates. For stores that remain open, access is limited, and employees are stationed outside to admit people. Most everyone was wearing a mask in the malls I visited.
Based on visits to four major malls in my area, including two of the largest grossing malls in the nation–Sawgrass Mills and Aventura Mall, both in Florida–these changes were evident. After the COIVD subsidy checks were spent, shop workers said traffic declined significantly. Shopworkers said the malls were dead during the week. The only stores that had any activity were those holding sales of at least 50% off. The luxury shops (Gucci, Fendi, Jimmy Choo, Von Furstenberg, Burberry, Chanel, Hugo Boss) remain open, but with little traffic.
In mall management, the parts are greater than the whole, so when the parts don’t bring in the revenues, the whole mall suffers. This is what we are seeing today.
Office building are also suffering as businesses realize their employees can work remotely. Gig workers, who were never stable customers in the first place, should also disappear from We Work-type office spaces as that business model goes into the scrap heap.
The graphics and story below focus on the serious decline in commercial real estate, including malls and office buildings. This real estate sector is suffering from the triple whammy of the recession, the COVID virus, and a dysfunctional political system led by a sociopath president. There is no escaping those conclusions. Combined, all this means that commercial real estate, the core engine of consumerism, is in serious trouble.
What is clear is that the malls a decade from now will look dramatically different than they are today. There will be fewer of them. Those that remain will have a residential component and smaller stores, many of them seasonal or temporary.