As Americans start to shop in actual stores more, suburban malls are making a comeback — but big-city storefronts are lagging
Parking by the food court just got tougher… Malls were hit hard during the pandemic as shoppers ditched fitting rooms for sweatpants. Lockdown measures forced a record 12K+ US stores to close in 2020, as mall icons like J. Crew, Neiman Marcus, and Brooks Brothers filed for bankruptcy. Now Simon Property Group the country’s largest mall owner, is calling the comeback:
- IRL again: SPG’s sales topped pre-pandemic levels for the first time last summer as pent-up consumer demand and extra savings revived IRL shopping.
- Burbs: Last year, Scottsdale’s Fashion Square, one of Arizona’s biggest malls, saw a 16% jump in foot traffic from 2019, while Houston’s popular Galleria saw a 7% spike.
- Commercial real-estate broker CBRE saidthe US retail market could see a decade-high number of new leases this year.
Tale of two retails… While malls have been benefiting from the return to normal, urban retailers are still struggling. Shares of Vornado Realty, which owns property in metro areas like New York, Chicago, and San Francisco, are down 33% over the past two years. A couple reasons:
- Tourist turbulence: The pandemic wiped $60B in tourism $$$ from NYC’s economy. While international visitors — and their wallets — are trickling back, the city expects that traffic to reach a fifth of pre-pandemic levels this year.
- Digi happy hours: Now that just 3% of office workers say they want to return in person full time, retailers that used to thrive on those visits are worried. (NYC’s new mayor is all but begging CEOs to bring their employees back.)