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OM in the News: The Shopping Mall With No Stores

June 20, 2017

At Fairlane Town Center in Dearborn, Mich., Ford converted a former 240,000 sq. ft. Lord & Taylor department store into a workspace for almost 2,000 engineering and purchasing staff.

As retailers close bricks-and-mortar stores at an accelerating pace, shopping-center landlords are facing a vexing question: What to do with all this empty space? “Their solutions,” writes The Wall Street Journal (June 12, 2017), “are varied but all have a common element: reducing, or even eliminating, retail from the equation.”

Some landlords plug empty spaces with churches, for-profit schools and random enterprises while they figure out a long-term plan. Others see a future in mixed-use real estate, converting malls into streetscapes with restaurants, offices and housing. And some are razing properties altogether and turning them into entertainment or industrial parks.

A construction binge in the 1980s and ’90s left the U.S. oversaturated with malls. Growth in online sales and declining demand for full-priced goods are causing retailers to shrink their store fleets and divert resources to e-commerce platforms.

More than 8,600 stores are expected to close this year. Analysts predict that 400 or so of the 1,100 malls in the U.S. will close in the coming years.

One strategy is to convert enclosed malls into open-air properties that landlords call “lifestyle centers,” with apartments, theaters, grocery stores, medical offices and other conveniences—and much less retail.

Classroom discussion questions:

  1. Are malls easily convertible to an office layout remodeling? Why?
  2. Provide local examples of how malls are adapting to the changing (shrinking) retail store climate.
2 Comments leave one →
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