12A — March 27 - April 9, 2015 — Shopping Centers — M id A tlantic

Real Estate Journal


R etail E xperts

By Jesse Tron, ICSC The Great American Mall is alive and well

T he great American bas- tion to consumerism known ubiquitously

izations linking it to all malls, play up the “nostalgia” factor, rinse and repeat. But that narrative belies the true nature of what is occur- ring in the industry and tests the limits of the post hoc ergo propter hoc fallacy (the idea that sequence proves cause). It would go something like this: e-commerce is born, mall X dies. And, therefore, all malls will die. Now the “e-commerce is born” statement is just one of the many starting points that these articles like to assert. These statements appear to give gravitas to the overall ar- gument that yes, e-commerce

was, in fact, created and, there- fore, the rest has to be true, right? The fallacy, however, can be found in the sequenc- ing. E-commerce did not nec- essarily lead to the demise of mall X and, therefore, won’t lead to the demise of malls in general – no more so than a rooster crowing just before sunrise causes the sun to come up. Whatever the initial infal- lible statement is, the “proof” is always presented as a case study of a singular mall that has fallen on hard times. More often than not, the truth is that we are looking at an economics or demographics story about an economically

depressed area that can no longer support large-format retail due to a lack of job and/or wage creation, or a significant decrease in total population. It’s not that e-commerce is taking over or that consum- ers don’t find the mall “cool” anymore – it’s that they don’t have the means to spend on discretionary purchases. However, that’s not a story that produces the kind of head- line that drives clicks or sells papers. So we end up with a “malls are dying” story that profits on readers nostalgia of their bygone youth. The story writers, long past the days where they could hang-out in

malls for hours on end posit that today’s youth is all about technology and online interac- tion – they would never spend time in the mall, right? Of course, does anyone bother to ask today’s millennial shopper about their purchasing prefer- ences? Not often. The fact is today’s teens are hanging out (and shopping) at their local mall. Teen Vogue released a study over the holidays that found nearly two-thirds of teens conducted their holiday shopping at physical stores. According to Publisher Jason Wagenheim, “For the Millen- nial shopper—especially the 16- to 26-year-old segment— the mall remains the most important part of the overall omni-channel shopping story.” Sometimes, the story is that a new or better mall or shop- ping center moved into the market and has rendered an old property obsolete. Some- times, it’s an economics or poor business practices story on the part of the property owner. He or she either refuses to commit more capital to the project to make necessary improvements, or they simply can’t do so. At the end of the day, though, we should be talking about a unique story on a unique prop- erty – not a commentary on an overall industry or format type. Frankly, 90% of malls in the United States are very healthy. If you choose to look at the bottom 10% of any industry, I’m sure you’d find weakness. We live in a capitalist society – which means there will always be winners and losers – but in- sisting that the bottom 10% is indicative of an entire industry is irresponsible at best. But, the numbers speak loudest of all. Mall occupan- cy stands at 94% nationally, which is two percentage points higher than total shopping center occupancy. Net Operat- ing Income, or NOI, which is one of the truest measures of a property’s success, increased by 17.5% at U.S. malls in 2014 – the strongest annual gain re- corded by the series – and mall REITs (Real Estate Investment Trusts) were the strongest performing in the retail sector, delivering returns of almost 33%! And by the way, U.S. REITs overall nearly doubled the return of the S&P 500. Check out this infographic for more stats. Jesse Tron is director of communications andmedia relations for the ICSC. n Cel brating over 20 years of Engineering Excellence

as “The Mall” is not taking the prover- bial standing eight count, contrary to various exag- gerated me- dia reports. Much ink

has been spilled of late on this “Death of Malls” topic, with each being more inflammatory than the next. Let’s face it, it’s an easy story to write: Find a struggling or defunct mall, write a story making general- Jesse Tron

Celebrating over 20 years of Engineering Excellence!


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