Property Types

The mall is dead. Actually, in my opinion, the mall has been dead for several years. But no one has bothered to tell the mall.

COVID-19 may have dealt the final blow to malls. But the downward spiral began, quietly, on July 5, 1994: The founding of Amazon.

Amazon provides a virtually limitless selection of consumer products in one location. Gone are the days of leisurely strolling from store to store to find the perfect item. That item is a few clicks away on Amazon. The introduction of Amazon Prime in 2005, with two-day shipping, has accelerated the demise of bricks-and-mortar retail.

In the past year, over 20 national retailers have filed for bankruptcy protection. The next 12 months will be worse. Paycheck Protection Program loans and landlord leniency have merely kicked the can down the road for most retailers. In Metro Detroit, both Partridge Creek and (especially) Fairlane are doomed to fail as currently constituted. Lakeside Mall has already been sold to an owner (for less than $18/sf). The new owner is planning reuse involving “dynamic mixed-use destinations.”

Even the once-untouchable Somerset Collection has been impacted by vacancies, as well as the recent bankruptcy of one anchor (Neiman Marcus), and the potential bankruptcy of a second anchor (Macy’s). Even Nordstrom is not immune to the impact of online retailing, closing 15% of its full-line stores in 2020.

So what is to become of these once-proud regional malls? Expect reuses involving a mix of alternate uses (mega-churches, fitness centers), multi-family residential, and other less desirable uses (waterparks, etc.). One potential user is the villain itself: Amazon. Amazon could be a prime user of anchor space for fulfillment, order pickup, and small-scale retail (4-Star stores). But Amazon will not be paying the rent, and will not be drawing the foot traffic, that malls need to survive as currently constituted.

The mall is dead.