Malls, at the end of one race another begins

centri commerciali
Michele Caprini
04 Apr 2019

Dead mall

Raise your hand if, a few years ago, you thought that malls would become signs of ruin. That this ruin could be deeply internalised that it becomes art: photography, cinema, painting, music, reading. A simple check can be done by searching “dead mall” on a browser or going straight to the Wikipedia page.

We are talking about the United States naturally. Post-war, shopping malls have since been the emblem of consumption and wealth, and a way of life for Americans. Not all, but certainly the most visible and from the image, the most “exportable”. To this day, two thirds of American gross national product comes from personal expenses.

We have been speaking about the “Retail Apocalypse” for years. We even contest the nature of this term, which does not include the sector indicators nor the excess of offers which characterises.

However, it is also true that from 2016 to 2018, Chapter 11 has shown interest in 35 of the most famous American emblems. This is excluding the hundreds of lower brands. At the end of last year, the available surface areas within malls increased by 9%. Westfield, one of the largest in the country, in 2007 42% of its profits came from malls, today it has dropped to 28%: from 69 to 33 units.

The crisis certificate

In the last weeks a clear statement from the financial world arrived affirming the crisis. First Canyon Partner, the biggest American credit hedge fund, then Goldman Sachs have given their views to investors regarding commercial real estate, betting on its implosion.

Is it an international homogenous trend?

Overall, the purchase cycle and consumption trends are not far from similar, not even to those in 2007, and malls are paying the price. The physical concentration of the offer that favors volumes no longer works. Where the integration with online channels has not been done effectively, companies suffer.


There are clear asynchronies. In Europe things do not work like in the States. Some places are clearly suffering (according to Bloomberg French malls are finding themselves with 11.2% of empty space), in other areas investments in commercial retail are growing and revenues are steady. A light decreased was marked in 2018, but only after an excellent 2017. The most rewarded countries were the UK and Germany, where the e-commerce index is greatest within the continent.

Another opportunity

Malls still appear to be an interesting area of investment; more so if they are placed in urban centres rather than in the outskirts.

SSelling should not be the focal point of malls, but rather the social interactions from food and beverage to entertainment. Building within urban perimeters in the US has proved to have significant returns.

Especially if it is a true omnichannel device. As time passes, it becomes more evident that a physical touchpoint is fundamental even to online operators. If what is already happening for Amazon was not enough, one of the last possible examples is a virtual reality by excellence: TripAdvisor, which is already gearing up a territorial network.

If the strategic objective for malls is to welcome and promote the digital transformation, it is worth remembering that physical retail has its preferences from most shoppers. We are talking about percentages oscillating between 82% and 86% of global retail shoppers. The European e-commerce average, on the other hand, is lower than 10% with peaks of 19% in Great Britain.


In Italy, the scene is contradicting. After the continued growth in the past years, for the first time in 2018 the balance was negative: 10 malls ended their activities ahead of 9 new openings. There are many more structures which accuse the stagnation or decrease of traffic.

The situation in Italy of bought merchandise can be classified in the factors of age and size. 73% of structures were born prior to 2007 and only 17% surpass the 40,000 metres squared of surface area, according to Falcon Malls (the group owns 20 malls worldwide with 130 million annual visitors).

Hundreds of small shopping malls are the ones facing the most difficulties. 7% of those classed as triple B (25-80 stores, 3.5 – 5 million annual visitors) cannot sustain the traffic. However, the tides of change are strong, and investments in commercial real estate are increasing.


At the edge of a paradox, lies Milan. In the metropolitan area 22% of gross national product is produced, middle level income and consumption per capita are considerably higher than national average. Despite this, there is no talk regarding the saturation of malls, but rather, of undersize.

In the province “Meneghina” the density of malls per 1000 inhabitants is equal to 448 metres squared, but it plummets to 156 metres squared if only structure’s with more than 40,000 of GLA (usable commercial space). Despite the recent opening of the mall “Centro di Arese” (135,000 metres squared) and Westfield in Segrate (180,000 metres squared), Milan and its province are still a blue ocean.

It is just, therefore, to expect investments in next-gen structures able to interpret new, global, trends and repeated purchase trends. Whilst avoiding the damages cause by potential Sunday closures.