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 - Get Report), addressed the issue about as bluntly as he could: "I don't think we're overbuilt, I think we're under-demolished."(SPG - Get Report) 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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