PORTLAND, Ore. (TheStreet) -- Rewatch Fast Times At Ridgemont High, Clueless and Mallrats all you'd like, but Damone, Cher and Jay and Silent Bob aren't hanging out at the mall this summer.
Once a summer staple packed with clothes, food courts, arcades and expendable income, the giant indoor mall is dying a slow, unpopular death. ShopperTrak, whose entire purpose is to gauge retail foot traffic, says the number of folks who passed through indoor malls last year dropped 1% from the year before and has been falling steadily.
As The Wall Street Journal noted last summer, analysis firm Green Street Advisor thinks 10 % of the roughly 1,000 large malls in the U.S. will fail within the next 10 years. A report from Co-Star found that there are more than 200 malls with more than 250,000 square feet that have vacancy rates of 35% or higher, a "clear marker for shopping center distress."
Tim Worstall at Forbes, meanwhile, says that online sales that amount to roughly 8% of the retail market should diminish physical store space by roughly the same percentage as they grow. Daniel Hurwitz, president and chief of mall operator DDR (DDR), addressed the issue about as bluntly as he could: "I don't think we're overbuilt, I think we're under-demolished."(SPG) how they're doing and they'll say vacancies are down, rent is up and their stores are making more per square foot. Australia-based mall magnate Westfield can make similar, more marginal claims, but each has a little secret. In Simon's case, the company's been shifting its focus to outlet malls. According to Capri Capital Partners, sales per square foot at outlet malls rose 9% from 2010 to last year, while traditional malls got a slighter 4% bump. Westfield, meanwhile, has been redeveloping its indoor mall stock to make them more tech friendly and to update the selection a bit. While the U.S. vacancy rate for Simon and Westfield hovers around 5%, Reis notes that vacancies for U.S. malls as a whole skew closer to 9%. Rent per square foot for traditional malls has dropped steadily since 2007. So why should this affect teens, especially since a Piper Jaffray Taking Stock with Teens market research study revealed that 82% of teen spending is still done in bricks-and-mortar stores? It's a lot tougher for teens to max out credit cards shopping online after the Credit Card Accountability Responsibility and Disclosure Act of 2009 required anyone under 21 to either have a cosigner or verifiable income. Also, it's a lot easier to spend at the mall when you work there or are otherwise employed.
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