What to do about all that excess space?

U.S. retail has historically been “over-stored” but never more so than right now, with an escalating wave of brick-and-mortar closures. The question for mall developers (addressed in the following RetailWire comment) is: What to do about it?

The U.S. has for many years had far more retail square footage than any other country: 25 to 50 sq. ft per capita (depending on how you measure it) compared to 2.5 sq. ft. per capita in Europe. It’s apples and oranges but it still illustrates that the “overspace” problem in the U.S. existed long before e-commerce put additional pressure on all that space.

The residential real estate market deleveraged after the Great Recession but retail real estate is unwinding at a slower pace. And all that footage in shopping centers is not going to be gobbled up by traditional department stores or mall-based retailers, who already have too much space. The challenge is how quickly the space can be redeployed for food, drug and discount retailers who might actually need the added locations.

And a few more comments from a more recent post:

There is still room for traditional department stores as mall anchors, but they need to be relevant to the consumer as well as consistent with the profile of the overall tenant mix. But the old paradigm of two traditional stores, Sears and Penney just doesn’t cut it anymore, and is undergoing well-deserved “creative destruction.”

Part of the challenge for the anchors that remain is to spend some money on new paint, floor treatments and lighting! Even at a showplace mall like University Town Center in La Jolla, where Nordstrom is relocating to a brand-new building this fall, Macy’s in particular stands out as a bad example of lack of capital spending. You can only go so far blaming the “death of bricks and mortar” on e-commerce if you’re not willing to keep your house in order.

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