The news: Mall operators are breathing new life into their real estate by replacing vacant department stores with entertainment and restaurants—and traffic is following. Visits to outdoor malls rose 6.6% YoY in August and have risen every month of this year, per Placer.ai. Foot traffic to indoor malls increased 5.0% and has risen in seven of the first eight months of the year.
That momentum is renewing investor interest in malls. Mall values are up 13% YoY, outperforming nine other commercial property sectors and rising more than twice as fast as overall commercial real estate prices, per Green Street data cited by The Wall Street Journal.
Paris-based owner Unibail-Rodamco-Westfield is buying out partners at two of its malls—Westfield UTC in San Diego and Westfield Southcenter—just four years after announcing a “radical reduction” of its US market exposure through the sale of nearly all its properties.
Why is this happening? Malls are finding success by offering what ecommerce can’t.
While ecommerce excels at speed and convenience, malls give consumers reasons to spend time beyond simply completing a transaction. As operators replace a predictable mix of retailers with a broader combination of luxury brands, restaurants, entertainment, and other attractions, malls are evolving into destinations rather than simply places to shop.
Stores themselves are serving a broader purpose, too. Beyond the instant gratification of walking out with a purchase, they let consumers find inspiration, touch and feel products, get personalized service, and be entertained.
Together, those experiences give consumers more reasons to linger, explore, and ultimately spend. Placer.ai’s data bears that out: Average dwell times at outdoor malls rose 4.6% in August to 68.3 minutes, while dwell times at indoor malls increased 4.4% to 75.3 minutes.
Consumers may also be consolidating trips as fuel costs rise, which could help explain why dwell times at outlet malls ticked up to 73.2 minutes even as visits fell 2.7% in August.
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