A lot of shopping malls are dying. You’ve probably heard this before. But how bad is it and what exactly is happening?

Well, a new report by CoStar (heard through the New York Times) found that nearly 20% of the 1,200 malls in the US are presently in trouble. “Trouble” is defined as a mall with a vacancy rate of 10% or more.

But what’s perhaps most disconcerting about this number is that, as recently as 2006, only about 5% of the malls in America would have been pegged as being “in trouble.” Here’s a chart from the New York Times (I’d love to see this same graph with a longer time horizon):

But not all malls are dying. The general sentiment seems to be that the high-end A malls are and will continue to thrive, and that it’s only the B and C malls that are dying:

Tom Simmons, who oversees the mid-Atlantic shopping center division of Kimco, another real estate giant, is more blunt. “There are B and C malls in tertiary markets that are dinosaurs and will likely die,” he said, but “A malls are doing well.” (NY Times)

So why is this happening? Some think it’s because the US is over-retailed. And some think it’s because of rising income inequality – which would explain why the high-end malls continue to thrive. But the experts seem to agree that it’s not the result of more people shopping online:

One factor many shoppers blame for the decline of malls — online shopping — is having only a small effect, experts say. Less than 10 percent of retail sales take place online, and those sales tend to hit big-box stores harder, rather than the fashion chains and other specialty retailers in enclosed malls. (NY Times)

I wrote a post 2 months ago where where I argued that big box stores will be the most impacted by online shopping (which is why so many of them now sell groceries). But I don’t believe that they are the only retailers that will be affected. Quite the opposite: Every retailer is or eventually will be impacted by the internet.

This threat is real.

Millennials have no hesitations about buying things online and, in many cases, they would prefer to do so. It has already been well documented that we (I’m a Millennial) don’t like driving as much as previous generations. So what makes you think we’d enjoy the process of driving to a mall?

But the other factor at play, I think, is that malls are no longer the “public space” of young people. Their position as a kind of cultural institution is waning. At the same time, more and more people are craving uniqueness. They like independent shops, not malls that all look and feel the same. And as these young people become old people, we might find that even the A malls start becoming impacted.

I don’t believe, for a second, that retail nodes within cities will ever disappear. But I think our attention would be better spent figuring out what the mall of the 21st century will be, as opposed to hiring PR firms to try and spin doctor our way out of this dead mall phenomenon.

Image: Flickr

A few weeks ago I had coffee with a friend of mine who is a partner at a Toronto-based enterprise software company called Polyform Labs. Their products are geared towards the commercial real estate industry and, since I’m a big proponent of introducing more technology into the real estate space, I thought I would share a little bit about them with you all today.

The first of their 4 main products is called Lingo, which is a machine learning tool that helps companies quickly review legal documents and contracts. In the case of commercial real estate firms, the most obvious use case is leases. These documents are often hundreds of pages long and, if you have a big portfolio of properties, I’m sure you can imagine how quickly these pages add up.

What’s neat about Lingo is that you basically upload a lease and then the tool interprets and summarizes all of the clauses for you. It then tells you where you’re potentially exposed and where your risk factors are. And if by chance it gets it wrong, you can correct it and the system will actually get smarter – hence the machine learning part.

I’m not going to go through their entire product line, but I did also want to mention one more called Aura. They call it a “location-aware loyalty engine”. And you may have heard of similar products out there in the marketplace. What it does is use the MAC address on mobile phones (which is a unique, but anonymous, identifier) to track how people and crowds move through spaces.

The most common use case I’ve come across is within shopping malls and retail spaces. It’s used to determine which stores have the most foot traffic, which departments and aisles draw the most people, how long people stay in each store, where they buy, and so on. So even if you didn’t already know about this technology, you may have already been giving up your location data. There are lots of mall landlords using it.

And it’s producing some interesting data. For example, as soon as somebody buys one thing in a mall, their propensity to buy something else grows exponentially. This is what the data tells us and I can certainly relate to it from my own experience. So as a mall landlord and tenant, you are obviously trying to figure out ways to encourage people to make that first purchase. 

The other use case that (obviously) came to my mind was with respect to city planning and urban design. How could we harvest anonymous location data to improve the way we design both our private and public spaces? Imagine if we had this data for subway stations, public parks, public plazas, and so on. I bet we would discover all kinds of ways to improve the experience within our cities. I’d like to see the location data for Trinity Bellwoods Park in Toronto on a sunny summer day.

But I digress.

If you’d like learn to more about Polyform Labs and their real estate products, click here. 

Image: WPC

A lot of shopping malls are dying. You’ve probably heard this before. But how bad is it and what exactly is happening?

Well, a new report by CoStar (heard through the New York Times) found that nearly 20% of the 1,200 malls in the US are presently in trouble. “Trouble” is defined as a mall with a vacancy rate of 10% or more.

But what’s perhaps most disconcerting about this number is that, as recently as 2006, only about 5% of the malls in America would have been pegged as being “in trouble.” Here’s a chart from the New York Times (I’d love to see this same graph with a longer time horizon):

But not all malls are dying. The general sentiment seems to be that the high-end A malls are and will continue to thrive, and that it’s only the B and C malls that are dying:

Tom Simmons, who oversees the mid-Atlantic shopping center division of Kimco, another real estate giant, is more blunt. “There are B and C malls in tertiary markets that are dinosaurs and will likely die,” he said, but “A malls are doing well.” (NY Times)

So why is this happening? Some think it’s because the US is over-retailed. And some think it’s because of rising income inequality – which would explain why the high-end malls continue to thrive. But the experts seem to agree that it’s not the result of more people shopping online:

One factor many shoppers blame for the decline of malls — online shopping — is having only a small effect, experts say. Less than 10 percent of retail sales take place online, and those sales tend to hit big-box stores harder, rather than the fashion chains and other specialty retailers in enclosed malls. (NY Times)

I wrote a post 2 months ago where where I argued that big box stores will be the most impacted by online shopping (which is why so many of them now sell groceries). But I don’t believe that they are the only retailers that will be affected. Quite the opposite: Every retailer is or eventually will be impacted by the internet.

This threat is real.

Millennials have no hesitations about buying things online and, in many cases, they would prefer to do so. It has already been well documented that we (I’m a Millennial) don’t like driving as much as previous generations. So what makes you think we’d enjoy the process of driving to a mall?

But the other factor at play, I think, is that malls are no longer the “public space” of young people. Their position as a kind of cultural institution is waning. At the same time, more and more people are craving uniqueness. They like independent shops, not malls that all look and feel the same. And as these young people become old people, we might find that even the A malls start becoming impacted.

I don’t believe, for a second, that retail nodes within cities will ever disappear. But I think our attention would be better spent figuring out what the mall of the 21st century will be, as opposed to hiring PR firms to try and spin doctor our way out of this dead mall phenomenon.

Image: Flickr

A few weeks ago I had coffee with a friend of mine who is a partner at a Toronto-based enterprise software company called Polyform Labs. Their products are geared towards the commercial real estate industry and, since I’m a big proponent of introducing more technology into the real estate space, I thought I would share a little bit about them with you all today.

The first of their 4 main products is called Lingo, which is a machine learning tool that helps companies quickly review legal documents and contracts. In the case of commercial real estate firms, the most obvious use case is leases. These documents are often hundreds of pages long and, if you have a big portfolio of properties, I’m sure you can imagine how quickly these pages add up.

What’s neat about Lingo is that you basically upload a lease and then the tool interprets and summarizes all of the clauses for you. It then tells you where you’re potentially exposed and where your risk factors are. And if by chance it gets it wrong, you can correct it and the system will actually get smarter – hence the machine learning part.

I’m not going to go through their entire product line, but I did also want to mention one more called Aura. They call it a “location-aware loyalty engine”. And you may have heard of similar products out there in the marketplace. What it does is use the MAC address on mobile phones (which is a unique, but anonymous, identifier) to track how people and crowds move through spaces.

The most common use case I’ve come across is within shopping malls and retail spaces. It’s used to determine which stores have the most foot traffic, which departments and aisles draw the most people, how long people stay in each store, where they buy, and so on. So even if you didn’t already know about this technology, you may have already been giving up your location data. There are lots of mall landlords using it.

And it’s producing some interesting data. For example, as soon as somebody buys one thing in a mall, their propensity to buy something else grows exponentially. This is what the data tells us and I can certainly relate to it from my own experience. So as a mall landlord and tenant, you are obviously trying to figure out ways to encourage people to make that first purchase. 

The other use case that (obviously) came to my mind was with respect to city planning and urban design. How could we harvest anonymous location data to improve the way we design both our private and public spaces? Imagine if we had this data for subway stations, public parks, public plazas, and so on. I bet we would discover all kinds of ways to improve the experience within our cities. I’d like to see the location data for Trinity Bellwoods Park in Toronto on a sunny summer day.

But I digress.

If you’d like learn to more about Polyform Labs and their real estate products, click here. 

Image: WPC