Donald Bouchard, CRE

The post-World War II economic expansion and the development of the interstate highway system prompted a giant exodus to the suburbs. Americans who were already in love with their cars flocked to new track housing developments on the outskirts of cities for a chance to live the American Dream, complete with single family homes, good schools and a patch of lawn. Of course we must not forget the tradition of backyard grilling which became a cultural suburban lifestyle standard.

Along with the development of the suburbs came a need to provide goods and services to an emerging middle class who had good jobs and disposable income. No longer would Main St. or other urban commercial neighborhoods suffice to address the ever-expanding consumer driven economy. Neighborhood grocery stores soon expanded into much larger venues situated “conveniently” within a short drive by automobile. Eventually, we were introduced to the traditional enclosed mall. Originally a “barbell” type design with two anchors embracing in-line stores with decorated interior common areas, shoppers flocked to these locations. They were a hit and struck a chord with the culture of the time. Soon traditional malls grew to become large three to five anchor behemoths, designed out of a standard playbook to attract hordes of shoppers with disposable income. The mall had evolved to a lifestyle that impacted social behavior in addition to consumer spending. I once heard the term “sport shopping” which is apropos for the cultural icon that shopping at a mall had become. It was the right property type, at the right time.

The heyday of mall development was in the 1970’s and the 1980’s when seemingly every major highway interchange was home to yet another larger shopping center. By some estimates, there were up to 2,500 malls in America at the peak of their popularity, although there appears to be no definitive figure on that score. The deep recession that began circa 1989, effectively ended new mall construction except for those that were already underway. Look around and you can easily see the results. No new ground up construction of a traditional enclosed mall has been seen in Massachusetts since the early 1990’s. That, by my count, is about a quarter century. What happened?

There are several factors that have drastically reduced mall development. These include the lack of appropriately located interchange parcels, market saturation, the emergence of competitive venues such as “big boxes,” power centers, life style and open-air centers. All of these alternatives compete for consumer dollars. Retailers as well have responded. Once in recent memory, certain retail brands appeared only in traditional malls. That has changed as more and more open air centers have tenant rosters that now resemble those at traditional malls.

Other changes have also had substantial impacts on the mall as an entity. Too much predictability has made the format seems “stale” to shoppers. Demographics also play a key role as younger shoppers opt for emerging venues such as on-line retailing and the increasing use of mobile devices to make their purchases. Economic factors are also impacting malls as many traditional anchors have suffered dramatic setbacks in popularity with sales volumes dropping considerably over the last fifteen years.

Will the mall survive? That depends. We have already witnessed the decline in the total number of malls that some analysts suggest currently stands at half of the peak supply. Mall closures, reconfigurations, foreclosures, and the abandonment of many malls by key anchor tenants have been all too common. Malls that are not market dominant are constantly being challenged by a litany of evolving economic and socio-demographic changes that have already rendered many malls obsolete. One observer predicted that another 10% to 15% of the total supply of malls will vanish in the coming years, unable to reinvent themselves and suffering from weak suburban locations, particularly at a time when there is a clear trend towards greater population shifts to urban cores.

The best malls? They are likely to perform well assuming that they will continue to dominate their markets. Adaptation is the key and the addition of entertainment and food options and the adoption by tenants of multi-channel sales options will assist in keeping the best malls relevant in an ever shifting retailing environment.

Only time will tell of course. What is certain is that the next great seismic shift in retailing may be just around the corner. Could it be a coming 3D printing revolution? I wish I knew.

Donald Bouchard, CRE is a senior vice president at Lincoln Property Company, Boston and is the 2016 chair of the New England Chapter of the Counselors of Real Estate.