business news in context, analysis with attitude

Bloomberg has a story about the continuing troubles being faced by the shopping mall industry, where softness in the bricks-and-mortar business and changing consumer habits are "pushing property owners to redraw development plans to keep up with rapid changes in the industry. With store closures accelerating, landlords are having to change course and find ways to create malleable space that can accommodate a revolving roster of tenants.

"More than a dozen retailers have filed for bankruptcy this year and chains such as Macy's Inc. are planning to shutter locations amid the rise of online shopping and changing consumer habits. As many as 13,000 stores are expected to close next year, compared with 4,000 in 2016, according to brokerage Cushman & Wakefield Inc."

Mall developers in places like Atlanta to Detroit are finding themselves abandoning old plans that were retail-centric and moving to mixed use development strategies that often include homes, apartments, hotels, offices and conference centers. The business climate is changing so fast that things designed just two years ago suddenly look vulnerable, and in some cases retailers and other consumer facing businesses are having to revamp their plans at the last minute so as to be more relevant and financially viable.

There was one interesting passage that stand out in terms of how developers have to think:

"Malls that survive the current retail shakeout will be in places where the community has grown up around the property, rather than the generic shopping centers at highway interchanges that dominated the U.S. suburbs for decades, according to David Kitchens, an architect with Cooper Carry … Landlords that want to be successful are thinking about lifestyle first and retail second, he said."
KC's View:
It is stories like these that make me wonder why supermarket chains would consider moving into mall locations that other large anchor tenants no longer want. I understand why the developers would want them - to generate traffic - but I’d be concerned about going into a situation that seems to be on the downside in terms of national trends.

That’s actually an interesting comment by Kitchens, that landlords have to think about lifestyle before thinking about retail. I’d suggest that retailers actually need to do the same thing, especially at a time when the nation is over-stored and the competition is coming at them from a variety of different directions.