Foot Traffic at Malls Climbs Above Pre-Pandemic Levels
September 20, 2021
U.S. mall traffic rebounded this summer as newly vaccinated Americans felt more comfortable leaving their homes. The surge has continued despite growing threats from the fast-spreading COVID-19 delta variant.
“After a year and a half of staying inside, there was a pent-up demand for doing something, and that something could have been just going to a mall,” Sarah Helwig, an assistant vice president at Morningstar Credit Information and Analytics, told The Wall Street Journal.
Mall foot traffic in July surpassed even 2019 levels, according to Placer.ai, a data analytics firm. Mall visits rose 0.7% compared to July 2019, prior to the pandemic. Outdoor malls continued to be more popular.
The rising foot traffic increased retail sales. That also offered good news to mall investors who in the initial months of the pandemic saw profits drastically decline from shutdowns and worried shoppers.
Justin Kennedy, managing partner of 3650 REIT, said his first priority is looking for more malls to invest in.
Still, Challenges Lie Ahead
The U.S. shopping mall sector does face some headwinds in the months ahead, however. Rising COVID-19 infections could make shoppers more comfortable staying home once again, analysts told The Wall Street Journal. Also, vacancy rates are still rising: Vacancies were at 13.7% over the past year for malls with securitized mortgages, according to Morningstar Credit Information and Analytics.
Older malls continue to struggle the most, especially those that have lost large department store tenants.
Also, fewer clothing retailers are signing leases, which is also prompting concerns about filling storefronts. More malls reportedly are considering nontraditional tenants that offer more entertainment options, such as trampoline parks or rock-climbing gyms.
"A trampoline park was not the most desirable tenant to bring to a mall a decade ago," Corey Bialow, CEO of Bialow Real Estate LLC, a brokerage firm that represents retail tenants, told The Wall Street Journal. "Now there's not a lot of people taking 30,000- to 50,000-square-foot spaces anywhere in the country."
“Malls Bounce Back, But Brace for Tough Fall Season,” The Wall Street Journal (Sept. 14, 2021) [Log-in required.]
Updated: October 15, 2021