Shopping mall decline: What malls are doing to stay open
GREENSBURG, Pa. (AP) — Barbara Wilhelm and Sally Findley remember when Westmoreland Mall was packed, even on weekdays.
They recently sat in the food court surrounded by partially filled tables. Some people waited in line at the nearby Sbarro pizzeria counter.
“Oh, there’s no crowds now,” Wilhelm said. “You come to this mall during the week and it’s like there’s nobody here.”
People sauntered in and out of stores. Music echoed off the tile floor. Of nearly 100 retail spaces inside the Hempfield mall, 10 storefronts sat empty, including the boarded up entrance to the former Bon-Ton department store.
Signs announcing “going out of business” sales decorated the windows of four businesses: Sears, Payless Shoes, Gymboree and Charlotte Russe. Helzberg Diamonds also has announced plans to leave the mall at the end of the month.
Westmoreland Mall had a vacancy rate of 8 percent at the end of 2017, according to Stacey Keating, a spokeswoman for CBL Properties of Chattanooga, Tenn., which owns the mall. More recent figures were not available.
At the end of 2018, the vacancy rate at regional malls across the country was about 9 percent, according to the latest figures from Reis, a real estate research firm. Rates have climbed steadily since 2016, when vacancies were less than 8 percent. The last two quarters of 2018 saw the highest mall vacancy rates since 2011, when it reached 9.4 percent.
“I think they’ve got a very rough road ahead of them,” said author and retail market researcher Pamela Danziger, founder of Unity Marketing in Lancaster. “One of the things I think mall developers have to look at is a new model of what a mall should be.”
In order for malls to survive what many call the retail apocalypse, owners need to dig into what the surrounding community wants and needs.
“I think that the secret, the real way malls are going to be able to pivot toward the future, is to look much more locally at how those mall locations can serve the local community,” Danziger said.
The focus, she said, should not look at malls as places only to shop. Rather, they should be an experience and provide a vital need to the community.
The space usually is already surrounded by strong infrastructure and has public transportation service - a key concept for CBL Properties, which owns 115 retail properties in 26 states - including the malls in Hempfield and Monroeville.
Easy access, visibility and infrastructure make those locations in Westmoreland and Allegheny counties key assets in the market, Keating said.
“These changes provide us with an excellent opportunity to evaluate a number of scenarios for each property, which include more non-retail uses like entertainment and dining,” Keating said.
Westmoreland Mall is joining a national trend of malls that are adding entertainment spaces to now vacant storefronts. A mini casino could soon fill the former Bon-Ton store, bringing with it restaurants, bars and nightlife.
That project is awaiting final approval from the Pennsylvania Gaming Control Board. Officials from The Cordish Companies, based in Baltimore, have said they plan to spend $131 million to build the casino, which would be similar to Live! Casino that serves as an anchor at Arundel Mills mall in Hanover, Md.
“We are excited about the prospect of bringing a casino to the property as it’s the ultimate combination of dining and entertainment, which is the direction the industry is heading,” Keating said.
Across the country, mall owners are taking similar steps, whether it’s adding gyms, health care facilities, restaurants or residential spaces.
At Hamilton Place, a mall in Chattanooga, Tenn., also owned by CBL Properties, Dave & Buster’s is slated to fill a spot formerly occupied by Sears. The arcade and restaurant space also will bring with it a boutique-style hotel with 145 rooms.
Northgate Mall in Seattle, Washington, will soon house offices, residences and open-space as well as some shopping.
Locally, the Galleria at Pittsburgh Mills in Tarentum, while no longer a thriving mall, has filled empty storefronts with non-traditional tenants such as an escape room, a church and an insurance agent among more traditional stores.
Even non-traditional malls such as Station Square, which has indoor and outdoor shopping and dining options, are looking to spur redevelopment in vacant spaces through new residential units.
But for a place like Monroeville Mall, which doesn’t have immediate plans to revitalize its empty spaces, location is key, Keating said.
“Monroeville Mall continues to experience excellent demand from a breadth of retailers as well as non-traditional uses,” Keating said. “We are evaluating a number of non-retail opportunities at Monroeville, including the addition of entertainment.”
The mall had a 13 percent vacancy rate in 2017, Keating said.
When Southdale Center opened in Edina, Minnesota, in 1956, it became the first indoor shopping mall in the United States. Over the next half century, the model was replicated some 1,500 times across the country.
That figure has since dropped to roughly 1,100, with Credit Suisse predicting that as many as 275 of those shopping malls will close by 2022.
“Right now, with the expansion of e-commerce and new options for people to shop, we don’t really need that kind of retail physical buildup,” Danziger said.
A growing number of people now shop online.
In 2018, online shoppers spent $517 billion with U.S. merchants, a 15 percent increase from the previous year, according to Internet Retailer. In-store retail sales topped $3.6 trillion, the e-commerce research firm reports.
Despite the trends, mall owners nationwide are working to revitalize empty spaces, hoping their properties don’t follow the fate of Century III Mall in Pittsburgh’s South Hills.
Las Vegas-based Moonbeam Capital Investments, owner of the West Mifflin mall that opened in 1979, permanently shut the doors in February after buying the long-struggling mall in 2013 and announcing plans to improve the property and bring in new stores - plans that never came to fruition.
As Tom Cammerata finished up his walk around Westmoreland Mall on a recent Tuesday, he said it was sad to see stores like Sears leave. Its last day was slated for Sunday. The likely addition of a casino and other entertainment options are welcomed, he said.
“I think it’s fantastic,” the Unity Township resident said. “My wife and I, we go a lot - we go to Vegas, we go to Atlantic City, so this is perfect. It will probably break us. Instead of shopping, we’ll go over here. But we’re looking forward to it.”
Information from: Tribune-Review, http://triblive.com