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Unconventional Tenants Boost Mall Traffic

By Jami Gibson

This week, I read several articles regarding the changing nature of malls. With increased competition from e-retailers, many brick-and-mortar stores can no longer afford to have their physical storefronts. These vacancies have left mall owners scrambling to fill the spaces, and they are now turning to unconventional tenants, or as the articles refer to them, pariahs, to draw foot traffic and transform these ailing spaces into entertainment hubs. These include tenants such as gyms, billiard halls, pawn shops, and massage parlors.

I’ve seen this shift for myself in several malls around the West Michigan area. Spaces once occupied by department stores such as Younkers, J.C. Penney, and Sears are now the sites of a Planet Fitness, Burlington, an indoor skate park, laser tag venue, and antique and consignment shops. Decades ago, tenants such as these would have never held prime real estate in a bustling mall, let alone an anchor store space. But online retail has really changed the game.

The forecasted growth among retail and recreation sub-sectors supports this shift. According to Hoovers First Research, here are the projected revenue growth rates between 2017-2021:

Departments Stores (e.g. Macy’s): -2%
Discount Department Stores (e.g. Target): -1%
Dollar & General Merchandise Stores (e.g. Dollar Tree): +3%
Nonstore Retail (e.g. Amazon): +7%
Used Merchandise Stores (e.g. antique shops): +4%
Fitness Centers: +4%

In addition, the overall Arts, Entertainment, and Recreation sector has projected revenue growth of 5% during that same time period.

Only time will tell if these unconventional tenants have what it takes to bring in the clientele they so desperately need to keep these malls from becoming obsolete.

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