By Mark Seavy

As department stores decamp from shopping malls across the U.S., these spaces are being reimagined as mixed-use and lifestyle destinations.

This trend has only accelerated as mall operators seek to replace the retail stores felled by the pandemic. Several one-time anchor tenants either shut down altogether (including Sears and Lord & Taylor) or are closing locations, with Macy’s being the most recent to unveil plans to shutter 150 stores.

That shift forced mall operators to rethink their strategy to not only bring in new tenants, but also attract younger consumers. Gen Z shoppers—ranging in age from 16 to 26—prefer in-person shopping as much as online shopping, according to research from the International Council of Shopping Centers. About 97% of Gen Z consumers surveyed said they shop at brick-and-mortar stores for the experience, while 95% indicated they shop online for convenience. Gen Z represents about 40% of global consumers and has $360 billion in spending power.

To attract these younger consumers, Regency Center Corp.’s Danbury Fair Mall in Connecticut signed pop culture chains Newbury Comics, Spencer’s, and FYE to join existing offering Hot Topic. It also added bowling (Round 1 Bowling and Arcade) and golf simulation (Golf Lounge 18) experiences as well as gained approval from the City of Danbury to build 140 apartments inside a former Lord & Taylor store.

In Kansas, meanwhile, investment firm Advisors Excel purchased and moved its headquarters into the 992,000-square-foot West Ridge Mall in Topeka, KN, which lost both Macy’s (2018) and Sears (2012) stores. The West Ridge Mall, which fell to a 39% occupancy rate in 2021, is being redesigned for non-traditional mall uses including experiences, co-working spaces, fitness centers, breweries, and cafes. It is scheduled to have a grand re-opening on April 5 featuring Tiffany Darwish, who rose to fame in the late 1980s with a remake of the hit single “I think We’re Alone Now” and embarked on a tour in 1987 that featured stops in shopping malls.

“The shopping mall operators have been pecking at the edges of experiential for a decade, but originally all they were interested in was leasing deals,” said George Wade, President of the consulting firm Bay Laurel Advisors. “That narrowed their field of opportunity. Since the pandemic, and since more retailers have also gone out of business, it has forced them to be more adventurous but in a cautious way, which is almost counterintuitive. It is going to take a while for this to shake out.”

Yet mall operators, for the most part, remain optimistic about the future as they refashion these shopping complexes as mixed-use and lifestyle destinations.

The Green Acres Mall in Valley Stream, NY is revamping a former Kohl’s store and adjacent space (a total of 300,000 square feet) to accommodate entertainment, dining, and retail brands, said Thomas O’Hern, CEO of mall operator Macerich. Macerich has also signed an agreement with digital art exhibition company Arte Museum to fill the third floor of the Santa Monica Place mall in California. The 48,000-square-foot immersive exhibition will mark South Korea-based Arte’s first flagship location in the U.S.

At the Water Tower Place mall in Chicago, licensee OGX Productions recently completed a Harry Potter Magic at Play experience. The mall is also expected to be home to a The Hershey Co. experience later this year. And hundreds of shoppers flocked to the opening of America’s first physical store for Princess Polly, an Australian fast fashion boutique popular among Gen Z and Millennials, at Westfield Century City mall last fall.

Overall, mall operator Simon Property had 126 signed leases at the end of 2023, representing 2.2 million square feet of new stores that are expected to open between 2024 and 2026, CEO David Simon said. The operator had a 95.8% occupancy rate at the end of 2023 after signing 4,500 leases covering 18 million square feet, he said.

“Contrary to popular belief, the American mall is not dead,” said Cody Foster, co-founder of Advisors Excel. “It simply needs a facelift. Developers are looking to shift shopping centers to a multi-purpose lifestyle hub, incorporating leisure offerings and getting people in the door again, whether they are consumers, tenants, or professionals.”