The Great ‘Mall Is Dead’ Myth

by Katie Sloan

It actually has become clockwork at every major retail event, be it Back to School, Christmas/Hanukkah, even July 4th. We see the inevitable “Mall is Dead” story in some newspaper or television report. Twenty years ago, catalogs and big box power centers were the killers; today, it’s e-commerce, market saturation and debt-laden millennials who will kill the mall. Only the most famous, highest-end centers in the major markets will survive, according to the doomsayers, with the remainder to be turned into any other use you can think of, from warehouses to office buildings to hotels to, yes, prisons.

Except the statistics — and our experience at 30 mid-market malls and lifestyle centers at Starwood Retail Partners — don’t support that argument at all. Industry research shows that mall visitation has bounced back well after the Great Recession, that customers are shopping, eating and enjoying the growing number of experiences our centers can offer, and that our industry is finding new life at all economic tiers. This article will dispel some myths with solid fact. We’re not all just sitting at home ordering from Amazon.

Myth: No one shops at malls any more.

Fact: If that were so, it would only be because, to paraphrase the great Yogi Berra, “They’re too crowded.” A recent survey by the International Council of Shopping Centers (ICSC) shows that three quarters of the population (approximately 184 million people) visited a shopping center in the first quarter of 2016 — and that was during the winter.

Scott Wolstein, CEO Starwood Retail Partners

Myth: Even when customers do visit centers, they only buy what they need and leave quickly.

Fact: Wrong again, according to the ICSC survey. Respondents said that in nearly half of these visits, shoppers purchased discretionary items — and dined out either at full-service or fast-food restaurant. That’s why we at Starwood have been expanding the food and entertainment offerings at our centers.

Myth: Young adults prefer e-commerce to shopping centers.

Fact: millennials seek social interaction — especially at shopping centers. These results are further substantiated by a recent AT Kearney report, which noted that three of four respondents between 18 and 34 visited a shopping center in the 30 days prior to the survey, higher than any other group. Nearly two-thirds of digital consumers cite the ability to see, touch, and try merchandise as a main factor for preferring in-store purchases, while more than half appreciate the ability to get products immediately.

E-commerce has in fact become a friend to physical stores — after all 93 percent of purchases still take place in brick-and-mortar! Our shoppers use the Internet to research items before arriving at the mall — and studies say two in three will literally do a price comparison while standing in the shop. Meanwhile, a number of e-tailers, including Warby Parker, Bonobos, Fabletics and yes, even Amazon, are opening stores as they realize that they too must utilize all channels of distribution to serve their busy customers.

Shopping center activity means that our properties remain hubs for the community. This is especially important for those of us who own and operate dominant centers in mid-markets, those that rely on their local and regional communities. The ICSC Activity Index reports that activity has risen by 27.5 percent from May 2011 to May 2016 — for most communities, the mall remains the place to gather.

Myth: The United States is overstored.

Fact:  It’s more accurate to say that the United States is somewhat disproportionately stored. Shopping center square footage has risen 2.4 percent from 2010 to 2016. While this is a slower rate of increase than in recent history, it does show we’ve grown — and today only needed centers that are substantially pre-leased can be built or expanded.

Granted, a significant percentage of GLA is obsolete: Their demographics have changed or retailers have closed. That’s nothing new in a mature industry, which must react daily to a changing audience. Meanwhile, developers now are demolishing and repurposing that space, which benefits all of us who are investing in finding new and innovative uses for former department stores, including restaurants, fitness centers and, yes, non-retail uses.

We at Starwood Retail, and our colleagues and competitors, continue to find new retailers and experiences that appeal to Baby Boomers whose needs and desires have changed, millennials who are just beginning to establish their own households, and Generation Z on the cusp of adulthood. We know that the quality properties gain market share while weaker properties find new uses and identities. With the slowdown in new construction during the recession and recovery, the market is slowly righting itself. This is a well-established pattern that has existed for generations: With the brief exception of the Great Recession and the recovery, brick-and-mortar retail sales have grown at about 3 percent annually. In fact, during the recovery, sales growth far exceeded 3 percent.

Myth: No one is building shopping centers.

Fact:  While it’s true that only one center of more than 1 million square feet has been built in the last six years, we’ve seen more than 400 new projects between 100,000 square feet and 1 million square feet over the same period. Is this a mature industry? Yes. Is there still opportunity? Absolutely, as markets emerge and evolve.

Retail is probably the sector of real estate closest to its customers — we must adapt our formats and offerings as their needs and lifestyles change. That can result in misperceptions, some of which I’ve addressed here. The mall is alive and well, as long as we in the industry continue to make our projects vital and viable.

Active in the retail business for more than 30 years, Scott Wolstein is the CEO of Starwood Retail Partners.

This article originally appeared in the September 2016 issue of Shopping Center Business. To subscribe to the Shopping Center Business magazine or e-newsletter, visit

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