Name: The Future of Malls in America
Uploaded: 2016-12-01
Duration: 4 min 38 s
Description: Fortune’s Phil Wahba explains

[ NOISE ] Okay, so first of all, can you set the record straight? Is the American mall thriving or is it dying? It depends. [ LAUGH ] Which is not the answer that you want. So it's basically, it's a tale of two kinds of malls. So you have thriving malls, the better ones that are called A malls, they're just killing it. They're the ones who have been able to renew themselves with restaurants, movie theatres, better retailers. What's different about an A mall? Well it has better restaurants and rather than the old fashioned food court which was a dump of classic utensils, you know you have silverware, you'll have also a broader mix of retailers and not just middle to lower end or not just luxury. You'll have a bit of both. At the other end you do have a lot of week malls and the once that people hear about are the once that are dying. The other one said are generating very little money that are in areas that. Are not thriving anymore economically, and that people have left. So, the bottom line is that, let's say you have a market that could host five malls ten years ago, can now only host three. Okay, so you have an A mall, a mall is doing well, is that just Is it higher end stores or is it really just a mix in geographic location? It's not just luxury stores. I mean, that does help but for example, the mall that I discuss at length in the feature is Roosevelt Field which is in Long Island. But it has JCPenney and it has Neiman Marcus. So you really run the gamut there. But that's sort of the key right now is to offer a little bit of something for everybody. And that's why they're bringing in entertainment, they're bringing in gyms. And eventually not Roosevelt Phil, but others. Are bringing in things like the CVS drug store, the medical clinic. So in the future the malls will be a lot more diverse in terms of their tenants. Right. Okay, so you write about Simon Property which strikes me as the biggest company, and the most important company that no one has heard of. You write about this in your excellent feature in the newer issue. Can you tell us a little bit about it and how large its reach is? So Simon owns 108 malls. Like Roosevelt Field, like King of Prussia outside of Philadelphia. So they tend to own the best malls in the country. But they also own the outlet centers including my personal mecca, Woodbury Common which is an hour north of New York, the luxury outlet stores. And they were smart about things. Just two years ago they spun off their weaker malls. And so their sales per square foot per year Are way up, they've shot up. And so that's how they're keeping their supremacy. So they shed the weak malls and they invest in the good ones, and then they buy better ones that are on the market. Okay, and so you write in the story that being the largest mall operator in the United States might be analogous to Reigning as the queen of the Compact Disc. How is Simon avoiding that fate? Well, we'll defend Compact Discs, I still buy them. However I'm in the minority. But in terms of Simon this is really about Them focusing on the malls that are winners and putting the money that it takes to keep the mall in touch with what people are. How they're shopping in 2016. The malls that we keep hearing about that are dying, are the ones that still looks like it's 1956. Mm- hm. Which is by the way, the year that was the left field was open. Alright. So what do you think in your professional opinion can Simon Property pull it off? And they are pulling it off and how. I would be worried about the others. So basically the good mall operators and there are four of them. Are pulling away from the weak ones. And so it's really an income inequality between the mall operators. So you talk about these b class malls, these c class malls, not doing well. Are we gonna see a lot more abandoned malls? Those photos of end- to- end specialty shops collecting cobwebs. What we're gonna see is repurposed malls because those places aren't just gonna be ghost towns. They do serve a purpose. These are big spaces near populated areas But a lot of them are being, it's already happening, are being repurposed into office space, medical space. You might even see some retailers opening distribution center, so they could be closer to cities because Amazon is getting faster and faster. So, those won't be malls, but they're not just gonna be places where weeds are growing out from the sidewalk. So what do you think about of the future of the American Mall. What is it gonna look like. What do you predict. Well and I'll be there regularly but it will continue to have department stores but it will tend to have broader mix. It's gonna have things like drug stores and have things like. The dry cleaner. It will have theater. It will have one of a kind restaurants. It will have yoga studios. It'll have things like SoulCycle. So it'll be a lot less apparel- focused. We see a lot of the apparel retailers have gone bankrupt of closed hundreds of stores. And those space are being fixed so I'm pretty optimistic about the malls as long as they continue to renew themselves. [ BLANK_AUDIO ]