Real Estate

The Rebirth of the American Mall

Any adult of a certain age remembers the teenage ritual of going to the mall. It is where you met your friends, saw the latest movie, shopped for back to school clothes, and got your ears pierced. The first mall ever construction was in 1956 in Edina, Minnesota, a posh suburb of the Twin Cities. The original concept behind the idea of “malls” was to engage a community of increasingly car-centric suburban residents. Malls were meant to be community spaces, designed for shopping, dining, events and even residences.

In its heyday in the 80s and 90s, malls were filled with shoppers, seniors getting exercise, kids seeing Santa, young adults on dates. Multiple stores anchored the facility. The movie theaters were packed, and the restaurants were filled. By 1992, there were 48 malls within a 90-minute drive of Manhattan.  The iconic Mall of America also opened that year and featured 5.6 million sq. ft. of retail space that grew into more than 500 stores. Over 1,500 malls were built in the U.S. between 1956 and 2005, and their rate of growth often outpaced that of the population or even demand.

All of that changed in by the mid-2000s. The rise of online shopping and the Great Recession led to a drop in sales and foot traffic at retailer anchors like JCPenney and Macy’s. Between 2010 and 2013, mall visits during the holiday season, the busiest shopping time of the year, dropped by 50 percent.

However, many of these structures still stand, and investors had to get creative as to what to do with all of the empty space. The focus has shifted to experiences rather than consumption, with 74 percent of Americans saying they would rather spend money on experiences than shopping. For example, at the Mall of America in Bloomington, Minnesota, visitors may get married, go to the theater, visit a theme park, comedy club and aquarium, as well as play a round of golf. Simply put, people are spending money, they are just spending it on different things.

In the last few years, food has become the gateway to the new American Mall. Updated food courts or urban food halls are taking over boring, generic food courts. Gone are boring food courts with generic burgers and greasy pizza. The new era is seeing gourmet burgers, sushi, craft breweries, Korean BBQ, poke bowls, ramen, and happy hours. This is not a new idea—Macy’s Cellar has been a go-to spot for shoppers since the 1970s and London’s fashionable Harrods’ has been must-see for every visitor since the late 1800s.

By making the mall a food destination, retailers see an increase in foot traffic and sales. Transactions increase as much as 25% at malls with quality food-and-beverage options, and shoppers who eat at the mall are spending up to 15% more per trip.

Malls are getting in on this trend. Tysons Galleria in Virginia has a concept called “Urbanspace at Tysons Galleria” that has brought in some favorite local eateries such as Lady M cakes, Sen Khao noodles and Ice Cream Jubilee. And the Hudson Yards mall in New York City, there is a massive Spanish-themed food hall on the lowest level as well as ten fine-dining establishments run by top chefs like Thomas Keller and David Chang.

Other restaurant brands getting in on the trend include fast casual restaurants like Shake Shack, Sweetgreen, Melt Shop, Poukei, Margaritaville, The Little Beet, Bobby’s Burger Palace, Five Guys, P.F. Chang’s, Halal Guys, Momofuku Milk Bar, Ladurée, Le Pain Quotidien, Sprinkles, and Sugarfina. And upscale dining establishments like the Capital Grille, Morton’s, Seasons 52, Katsuya, The Cheesecake Factory are expanding across suburban malls.

In addition to food, concept experiences are gaining traction and they are becoming popular anchors for the mall. These include concepts like Ski Dubai (an indoor ski center), Sea Life (aquariums), KidZania (a children’s role play), the Void (a virtual reality experience) Hub Zero (a virtual reality gaming center) and Orbi (a high tech wildlife park combining Sega and BBC Earth). There is also “experiential retail” with brands creating enhanced retail experiences. Some of the more popular experiences include the following:

Crayola Experience, Mall of America

Crayola Experience: More than two dozen hands-on attractions allow kids to name their own crayon, star in a coloring book and have a 4-D coloring adventure. They also feature an adults-only Crayola After Dark where guests enjoy wine and appetizers as they enjoy the arts.

Dave & Buster’s: The national food, bar and entertainment concept features a variety of arcade games plus a full-service bar and restaurant. The chain has about 90 locations, many occupying formerly large retail stores like Sears.

KidZania: A growing indoor theme park that began in Mexico and has expanded worldwide. Like a real-life Sim City, kids enter a miniature city that allows them to role-play in more than 100 occupations and professions. Each KidZania is tailored to its city, complete with buildings, paved streets, vehicles and a self-contained economy fueled by a currency called kidZos.

Main Event Entertainment: The growing national chain features state-of-the-art bowling, multilevel laser tag, a gravity ropes adventure course, mini golf, billiards and video games plus an Italian street-market food concept with a full bar.

Punch Bowl Social, Chicago, IL

Punch Bowl Social: A self-described “dirty modern mash-up of chandeliers, ‘Gangster’s Paradise,’ food for foodies, PBR tallboys and craft beverages,” this growing food and entertainment business offers everything from brunch to bowling parties, all-you-can-sing karaoke and shuffleboard.

 

Round One Bowling and Amusement: The growing chain offers modern bowling combined with billiards, darts, ping pong, arcade games, karaoke and a kids’ zone. It started in Japan and has 105 locations worldwide.

 

 

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