Shopping Malls Aren’t Dying, and Here’s the Proof

Topics of Discussion:

• More than 96% of Malls Are Performing Just Fine
• Net Operating Income Grew Solidly in 2014
• The Real Competition Isn’t from Online Shopping
• Mall Franchises Are Still Booming

#1 More than 96% of Malls Are Performing Just Fine

To qualify as “dying,” a mall needs to have at least a 40% vacancy rate. After reviewing an analysis of malls that truly are “dying,” only 3.4% of America’s malls qualify in this criterion. This means that the other 96.6% are performing up to par. Furthermore, only 20% of malls in America are even operating with 10% vacancy.

#2 Net Operating Income Grew Solidly in 2014

According to the International Council of Shopping Centers (ICSC), mall occupancy is the highest it has been since the year of 1987. Rental rates in malls are steadily rising, and net operating income continues to climb as well. The ICSC states that net operating income is at the fastest growth rate we’ve seen since 2000.

#3 The Real Competition Isn’t from Online Shopping

One of the general myths surrounding the decay of malls is that they’re becoming moot from other forms of shopping and consumer demand, such as online shopping. But studies show that online shopping still only comprises about 7% of retail purchases. The real competition for malls is a combination of demographics and competition from other malls.
In terms of demographics, declining populations and struggling middle-class wages are the culprit. Areas with smaller populations means less customers, and areas with struggling middle class sectors means less money can go into any form of shopping, including malls. So don’t believe the hype that shopping malls are an ancient form of accessing the goods and services that customers need and want.

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