Friday, May 2, 2014

Malls dead? Big cities resurgent? Maybe, but not so fast.

In 2011,the Wall Street Journal announced "No McMansionsfor Millennials”. The Gen Y generation, those born between 1980 and 2000 and who number 80 million have made their preferences clear - 88% want to be in an urban setting, according to a survey conducted by the the KTGY Group at the National Association of Home Builders annual conference that year. This factoid was part of a fantastic keynote speech given by Chris Beynon of MIG this week at the Business Improvement Association of British Columbia/InternationalDowntown Association Western Regional Conference in Victoria, BC (where I was also presenting). As always, Beynon is a joy to watch, and his presentations are chock full of thoughtful insight into trends that suggest the future belongs to downtown, as long as we are prepared to grab it. His presentation got me to thinking, is downtown truly winning the fight against traditional malls? Are the malls really “dead”, as he seemed to proclaim?
Do younger folks want this?
Or this? 

I would be more than happy for this to be the case – but  I think practitioners need to continue to take the competition for shoppers quite seriously. In fact, embedded within the same WSJ article....while 88% of the Gen Y generation may WANT to be in an urban setting, cities can be “so expensive” that places with many of the same amenities in the suburbs (like shopping, dining and transit) will “do just fine.” And because malls are owned by single-owner entities, they have the kind of ability to morph and respond to market conditions in a way that the traditional downtown, with multiple owners and objectives, simply cannot. In a later session that day, I also heard the downtown practitioners from Calgary, Canada (where it snowed ALOT this year) complain about the difficulties their merchants have when competing with indoor, climate controlled malls. 

While it is true that only one new enclosed mall has been constructed since 2006 (in Jonesboro, Ark) owing in part to changing consumer habits (thank you Amazon), malls are changing to be something else…a bit more like downtown. Malls are getting wise to the changing needs of consumers. They are incorporating a wider variety of uses, from play spaces and activities in their common areas, to housing and office space. And the malls that remain traditional malls are not taking the beating from the internet lying down. They are actively reinvesting in their properties to remain attractive places for shoppers to spend some time. As the Wall Street Journal noted in 2012, “In an attempt to keep shoppers coming—and to squeeze more revenue out of established locations—mall owners and retailers are shifting to renovations.” (Malls Get Facelift to Pull In Shoppers, WSJ, 12/18/12). 

And while Gen Y and millennials seek urban environments, they are increasingly finding some of these environments outside of the expensive major cities.  My nieces – both of whom are in their 20’s and were raised in suburban New York – are now starting their careers and both have a strong desire to live in suburban communities. They visit small suburban downtowns like Nyack, NY to go out with friends for drinks and dancing, but they like their cars, they like the suburban lifestyle and they really don’t consider moving to the “city” a viable option. "Too expensive" they say. "Not enough space." "Good for a night out, but not for a lifestyle." And as a mom with a four-year old son, I understand the appeal. A little extra space, a small yard, a good school without too much stress associated with the decision…all of these things are driving some of my own friends from my wonderful urban neighborhood of Jackson Heights to options in the suburbs. And these suburbs are morphing too, offering urban elements in the small downtowns that are scattered throughout the region. My friends, with their cute home in Beacon, NY, within a stones throw of a walkable, pedestrian friendly downtown, have a pretty good thing going on. And yes, they also go to the mall, because where else are they going to actually try on clothing and purchase the shoes and school supplies that their kids need for school? So it seems, we have a long way to go before we kiss the mall goodbye.

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