Already faced with pressures from the acceleration of e-commerce, malls were dealt an even bigger blow when the COVID-19 pandemic brought traffic and sales to a near-standstill. But now, amid the broader distribution of vaccines and pent-up consumer demand, experts are suggesting that the retail sub-sector might be headed for a comeback.
In a recent data analysis by Placer.ai, which looked at an index of more than 50 “top-tier” malls in the country, year-over-year declines in visits to malls were seen to have shrunk every month from November through January. According to the firm, March presented a “breakthrough” with visits surging 86% from 2020 levels.
While an increase in visits itself is unsurprising, considering that coronavirus-related lockdowns were enforced starting in the middle of March last year, visits to malls last month were also compared to 2019 levels: They were down just 23.9% — the lowest since the pandemic spread across the United States. Even accounting for weather challenges and fewer overall days in February, there was a 25.7% spike in visits in March compared to January, which the firm said had been the “high point” for the retail sector until then.
What’s more, Placer.ai looked at weekly visits, which appeared to have consistently risen throughout late February and early March. Visits the weeks of March 15 and 22, for instance, were 19.1% higher than the prior two weeks, likely due to the influx of stimulus checks and tax refunds.
“Does this mean the mall sector has completed its recovery? Certainly not. But it does mean that top-tier malls throughout the country still have exceptional strength,” VP of marketing Ethan Chernofsky wrote. “Their continued capacity to rebound quickly when given the opportunity speaks to the continued strength in the sector and explains why the format still deserves its lofty position within the retail landscape.”
The optimistic study follows a bleak analysis from Moody’s Analytics, which reported last week that the vacancy rate for regional and super regional malls in the U.S. hit 11.4% in the first quarter of this year — a 90 basis-point hike in a single quarter and the highest rate recorded by the financial services firm. It also surpassed the record 80 basis-point jump in the first quarter of 2009, around the time of the Great Recession.
However, Placer.ai previously suggested that such retail closures could lead to a shift in the mix of tenants at shopping centers — a trend that predated the pandemic. In a report in December, it wrote, “From co-working spaces and fitness chains in malls to department stores and classic indoor retailers in strip centers, the cross overs that were already being seen in 2019 will likely pick up pace even more in 2021. What’s best with this particular trend is that it will likely drive more success for more centers and malls.”