Here’s big news! Technology is changing Indian (that’s the subcontinent) physical shopping. The website IndianRetaile.com (not a typo) discusses how malls are updating to keep customers coming there. Since only 17% of shoppers are doing shopping this way the developers must change the physical conditions.

Some stores are providing unattended kiosk sales points for food and beverages or clothing and footwear. These hope to be the perfect fit for the mall. A T-Shirt company can customize order by size and color.

Parking is easier by using sensors to identify vacant spaces and identify aisles where they exist. Personalized communication is provided by Wi-Fi beacons to smartphones with welcome messages and store special sales.  These also provide the mall owner with customer data about the frequency and time spent at stores.  No data will be collected on purchases.

Steve Dennis writes in a 2017 Forbes article ““Barring an asteroid hitting Earth, the vast majority of retail will still be done in brick & mortar stores for a long, long time. Most of the major retail brands we know and love will remain household names. Hundreds of regional malls will not only survive but continue to do quite well, thank you.””

One mall anchor chain that does that is Nordstrom. Nordstrom began as a shoe retailer in Seattle in1901 and expanded to 373 stores operating in 40 US states, Puerto Rico and Canada, By comparison as of January 2016, Macy’s had 770 stores in total but announced on August 11, 2016, announced that it will close 100 stores in early 2017.

Nordstrom is not closing any stores. In fact, according to a July 2018 story in FN, a fashion direct website, Nordstrom says it can make $700 million in New York City.  It broke ground there in April 2018 with the opening of its men’s store and plans to unveil the adjacent women’s outpost in fall 2019.

“It’s really important to know, from our perspective, we have a total market approach for New York — it’s not just about what happens in the four walls,” Kenneth Worzel, chief digital officer and president of Nordstrom.com, told investors. “New York is already our No. 1 market for online sales. But we also know from experience that when we add to a digital-only experience, a flagship store experience, it not only generates four-wall sales, it generates a big lift in our digital business with customers.”

There is some hope that malls can be repurposed.  The last several decades has seen industrial properties through adaptive reuse transition to residents and offices and the beginnings of this trend are occurring with these retail-oriented properties. Here are some examples.

A 2016 article in the Country Living website described this remarkable transformation. One of the first indoor covered shopping developments, Westminster Arcade in Providence RI, was developed in the 1890s to recreate those that exist in English cities.   It closed in 2008.

But instead of being demolished, developers decided to give the mall a second life: Though the first floor is still being rented out as commercial space, the top two floors have been turned into micro-apartments. The 38 units, which range in size from 225 to 300 square feet, are designed to accommodate the growing population moving into Rhode Island’s urban areas. So far, residents are generally young professionals who don’t have a lot of belongings, and so are able to live in tiny spaces. Rent starts at $550 a month, and there’s already a waiting list.

mall conversion to lofts

mall conversion interioir

A Wall Street 2017 article “The Mall of the Future Will Have No Stores” tells this remarkable story of chance opportunity. When Starwood Capital Group LLC bought Fairlane Town Center in 2014, the investment firm had a lot of work to do. The Dearborn, Mich., mall was only 72% leased, and among the vacant space was a sprawling former anchor store.

A random call to Ford Motor Co. to sell some mall advertising turned out incredibly fortuitous. In April, Ford moved its entire engineering and purchasing staff into the vacant anchor. Ford is now the mall’s largest tenant, occupying 240,000 square feet of space. The Mall’s food operators are doing much daytime business providing lunches to Ford employees.

mall WST offices and resturants

Enclosed mall space has been converted to medical offices and community colleges.  Another approach is to change enclosed malls into open-air properties that landlords call “lifestyle centers,” with apartments, theaters, grocery stores and other conveniences—and much less retail.

In Arlington, Va., landlord Forest City Realty Trust is redeveloping Ballston Common Mall by knocking down the main entrance to create a plaza, removing two-thirds of the roof and installing more windows to create wider vistas of open spaces. It is also building 406 apartments linked to the mall.

For an extreme case, the City of Columbus took over a central-city mall from the developer saying they weren’t doing their job.  Later the city had to close it down.  They demolished it and created Columbus Commons, a park, retaining the underground parking for surrounding offices and a performance stage, two cafes, a carousel and bocce courts.  For those of you unfamiliar with these they’re the Italian equivalent of the English lawn bowling but played on sand in small curbed areas.

The park spurred development around its perimeter with offices (in part through conversion of a nearby department store) and restaurants, with park facing buildings reserved for residential occupancy much like parks in Central London.

<mall removal

The website AD tells of the intermittent second lite of a mall. The Hawthorne Plaza Mall, in a suburb south of Los Angeles, closed in 1999 However. It served as the dystopian backdrop for the movie Gone Girl and HBO’s Westworld before redevelopment plans for the mall were announced last year.

Speaking of movie sets, during my time with a pension fund real estate advisor in the late 80s I was asked to go look at a mall in suburban Chicago that closed down.  When I and my associate got there we discovered that the interior had been totally trashed. The interior glass walls were completely destroyed with display debris lying all around.  Walking around we realized it had been the set for the mall car chase scene in the “Blues Brothers” movie with John Belushi and Dan Aykroyd. That was one way to start building demolition.

One prediction is that three out of five malls will disappear.  In fact, that will probably put our country in line with the rest of the world’s per capita number discussed in the first part of this blog. If we are as creative with this excess space as we have been with industrial we’ll see some good done.