THE MALL IS DEAD

Who Killed It, Why It’s Not Coming Back and What’s Next for Retail

Looks like something fromThe Walking Dead, right?

The main difference between this mall and

The Walking Dead...

The mallisn’t coming back to life.

Let’s see what we learn from examining the body.

Let’s see what we learn from examining the body.

First, we’ll check the vital signs, just to be sure

the mall is really dead.

400+ MALLS

Source: Yahoo! Finance

were repurposed or closed outright in last decade

Source: Yahoo! Finance

No new enclosed malls

have opened since

2006

Green Street Advisors, June 2012

10% of the 1,000 malls

in the U.S. will

FAIL in next 10 years

ARE MALLS OVER?

AMERICA’S ABANDONED MALLS ARE PLACES OF NIGHTMARES -BEAUTIFUL DECAY

NORTHTOWNE SQUARE MALL FIRST TOLEDO MALL TO JOIN “DEAD MALLS OF AMERICA” -EXAMINER.COM

Yep, things are NOT LOOKING GOOD

for shopping malls.

(But it wasn’t always this way...)

Yep, things are NOT LOOKING GOOD

for shopping malls.

Sales / occupancy rates at malls are stagnant; only fortress

malls continue to thrive

2009

More than 60 new malls larger than 400,000

square feet open in U.S.

80s–90s

First enclosed regional mall, Southdale Center,

opens in Edina, MN

1956

First megamall opens in Alberta, Canada with over 800 stores

1981

Mall of America opens with more than 35 million visitors in the first year

1992

FORTRESS MALLSare still succeeding due to population

growth, a desirable tenant mix, sophistication of nearby residents, and high-end amenities offered.

Some

In 2012, these two fortress malls surpassed $1 billion in sales!

South Coast Plaza Costa Mesa, CA 2.8 million sq. ft.

Northpark Center Dallas, TX

2 million sq. ft.

So, who is to blame for killing the traditional

shopping mall?

GEN Y

Approximately

80 MILLION18- to 35-year-olds living

in the United States

That’s more than

25% of U.S. population

In 2013, millennials

spent about

$600 BILLION

In 2013, millennials

spent about

By 2020, millennial

retail spending could hit

$1.4 TRILLION

$600 BILLION

What was Gen Y’sMOTIVE?

Malls weren’t meeting their LIST OF DEMANDS

Walkability

Urban FeelWalkability

Urban Feel

Local Restaurants

Walkability

Unique Experiences

Urban FeelWalkability

Local Restaurants

Source: ArchPoint Consulting

of millennials say customer service is

very important

48%

of millennials demand an integrated, seamless shopping experience, regardless of channel.68%

Source: Accenture

Online shopping offers a wider selection, better prices and access to more information.

Naturally, malls are struggling to keep up.

Amazon’s five-year average ROI is

17%whereas traditional

retailers average 6.5%

During the 2013 holiday shopping season, U.S. retailers received roughly

HALFof the holiday foot traffic they experienced three years prior.

In 2014, it is forecasted that online sales will account for

9%of total U.S. retail sales.

This will likely increase to

11%of total U.S. retail sales by 2018.

Source: ArchPoint Consulting

80%of millennials want

brands to entertain and delight them during their

shopping experience

Don’t write off these new, higher expectations as

MILLENNIALS BEING

MILLENNIALS*

* Millennials are stereotypically assumed to be spoiled, demanding, etc.

MILLENNIALS BEING

MILLENNIALS*

Don’t write off these new, higher expectations as

This evolution within the retail industry extends beyond adults

ages 18 to 35. There is a

NEW CLASS OF CONSUMERS

They expect a new kind

of shopping experience that has…

Walkability

Experiences Connectivity

and they are going to get it.

The new-class consumer provides instant feedback. She posts pictures of what she likes on Instagram and complains on Twitter about bad customer service. She spends money in places where she enjoys being. The smart retailers are taking this feedback and evolving their visions and merchandising strategies. !Liz Gillespie VP Marketing North American Properties

Top retailers

GET IT

We've had a real estate strategy of not bundling or taking weaker malls, and we go to [lifestyle] centers… which allow us to really drive ourbusiness through community.

Christine M. Day Lululemon Athletica Former President and CEO

We rarely do malls. Our preference is to be on the street. In a suburban market, we want to be in a village atmosphere that has pedestrian as well as vehicular traffic. !Wade McDevitt Representative for Anthropologie

And they aren’t alone. Countless restaurants and retailers are choosing this…

Alpharetta, GA

Instead of this…

Image of rundown mall

Some brands are leaving

their current Alpharetta

locations and relocating to Avalon.

Others are completely new to the market and

chose Avalon for their

first location.

L O U G R E Y

And they aren’t alone. Research shows that top brands and

up-and-comers, alike, are moving

AWAY FROM MALLS

2 STORES OPENED THIS YEAR 4 MORE OPENING The Woodlands in The Woodlands, Texas (Lifestyle Center / March 2014)

Shops Around Lenox in Atlanta, Georgia(Open-Air Center / May 2014)

University Park Village in Fort Worth, Texas (Lifestyle Center / Summer 2014)

The Summit in Birmingham, Alabama (Lifestyle Center / Fall 2014)

Avalon in Alpharetta, Georgia (Mixed-Use / Fall 2014)

Classen Curve in Oklahoma City, Oklahoma (Mixed-Use / Fall 2014)

3 STORES ANNOUNCED TO OPEN THIS YEAR Belvedere Street in Tiburon, California(Standalone / June 2014)

North Hills in Raleigh, North Carolina(Lifestyle Center / June 2014)

Avalon in Alpharetta, Georgia (Mixed-Use / Fall 2014)

Planning to open another 5-10 before the year’s end; haven’t announced where or when

78 FREESTANDING STORES The McLaughlins seek buildings with character on street locations, occasionally open in lifestyle centers, and shun malls.

“Frankly, the mall atmosphere diminishes the brand.” – Kevin McLaughlin

Top developers and operators

GET IT

THE GROVE’S AWARD-WINNING

CONCIERGE SERVICES

Personal shopping Dining reservations

Package check Store, area and

tourism information Foreign language

assistance Events and activity

assistance The Grove Gift Cards by American Express

ONE OF THE BIGGEST TOURIST ATTRACTIONS

IN CALIFORNIA WITH 18+ MILLION

VISITORS PER YEAR

THAT’S MORE THAN DISNEYLAND!

THE AMERICANA AT BRAND’S

CONCIERGE SERVICES Bellman service,

package assistance, package check

Restaurant and travel reservations

Assistance with concert/event tickets

Postage, mail, shipping and delivery assistance

Gift giving and shopping assistance

Gift cards by American Express

THE AMERICANA AT BRAND HAS

16+ MILLION VISITORS PER YEAR

GENERATES ANNUAL SALES OF $1,100 PER SQUARE FOOT OUT OF ITS 70 STORES

And…

The Southeast’s preeminent experiential development – a place

where resort-inspired hospitality, specialty retail, entertainment, restaurants,

residences, offices, hotels and public spaces come together to create a

truly unique experience. 

60+ leases signed with Avalon in the past year

97%leased when Avalon was still 6 months away from

grand opening

Consumers are ENGAGED

Their feedback is not only plentiful, but positive as well.

RETWEETS 624MENTIONS 3,375REACH 17.8M

PAGE IMPRESSIONS 1.2MPOST IMPRESSIONS 678KENGAGEMENT 40K

MEDIA BUZZ

$600M MIXED-USE DEVELOPMENT IN ATLANTA SUBURB GETS GREEN LIGHT —COMMERCIAL PROPERTY EXECUTIVE

ALPHARETTA’S AVALON PROJECT SNAGS 1ST TENANT —ATLANTA BUSINESS CHRONICLE

One of Atlanta’s Hottest Restaurant Groups Signs at Avalon — North American Properties

“ALPHARETTA’S AVALON IS DRAWING IN-TOWN RESTAURANT, RETAILERS” —11ALIVE

“ALPHARETTA LIVE-WORK-PLAY DEVELOPMENT TAKES NEXT STEP” —WSB–TV

“AVALON GROWTH APPROACHING TO BOOST ALPHARETTA” —GEORGIA NEWS

The mall may be dead…

but retail is alive and well.

Experience it at

Opening October 2014

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Shutterstock / 35694751 AMC, The Walking Dead (Fair Use Doctrine) Shutterstock / 148370285 Wikimedia Commons Wikimedia Commons Flickr / “South Coast Plaza, Costa Mesa, 1980s" by Orange County Archives Flickr / "(Formerly) My Drive Home" by SteevzStuffFlickr / "Northpark Center" by Terrance Gilbert Shutterstock / 160438778 Atlantic Station / North American PropertiesFlickr / “The Grove in Los Angeles” by Eric E. JohnsonAngie Mosier Shutterstock / 3666347 Atlantic Station / North American Properties

Shutterstock / 119152066 Lululemon / Media Assets Flickr / “Anthropologie" by Dave Pinter Wikimedia Commons Kendra Scott Blog Flickr / “Vineyard Vines Hingham in-Store" by Jeff Cutler Flickr / "The Grove (Los Angeles)" by Prayitno PhotographyFlickr / "LA Farmers Market" by Prayitno Photography Flickr / "The Americana at Brand" by Chris Yarzab Shutterstock / 94124290

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