The Retail Landscape is Shifting (again)

Macy's recent announcement of store closures is set to have a ripple effect across the retail landscape, particularly for B and C-class malls.
As one of the last major anchor tenants in many shopping centers, Macy’s decision is not just a blow but a potential catalyst for the accelerated decline of Class C malls.

Strong brands and strong foot traffic define class A and B malls. In the US, there were 352 of these malls. By 2022, there were 316. Class C malls fell from 684 in 2016 to 287 in 2022. This sharp decline may become sharper again when Macy’s closes many of its locations.

We have undoubtedly too many shopping malls. That is a given. Retail is a different world than when shopping mall construction was booming.
The pressing question for real estate and retail professionals is: how can we innovate and repurpose all of that space?

Forward-thinking developers have shown that vacant shopping mall anchor stores can be transformed into vibrant spaces that attract a diverse number of customers. For instance, the San Francisco mall converted a Macy’s space to house a Whole Foods, a movie theater, sporting goods store, and health-care facility.

In Utah, a former Macy’s will soon become the practice facility for the Utah NHL expansion team, with skating rinks and corporate offices.
Even Amazon has converted Class C and D shopping malls into fulfillment centers in Louisiana and Ohio.

The Macy’s effect is not being felt in Canada. However, given the critical housing shortages, these shopping malls could certainly be leveraged to build multifamily ‘live, work, play’ communities.

It will be interesting to see how this unfolds.

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