Mall Visits Slump As Inflation Heats Up
Year-over-year visits to indoor malls, open air lifestyle centers and outlet centers were all down in August -- but analysts from Placer.ai say there's room for optimism.
Mall visits were down in August after a consistent run of year-over-year growth, in yet another sign that rising inflation and gas prices are constraining consumer spending.
According to Placer.ai data analyzing foot traffic for last month, both the indoor mall and open-air lifestyle centers sectors saw increases in the visit gap year-over-year, with the former posting an uptick of 1.1% between July and August and open-air lifestyle centers increasing by 0.9% in the same period.
“This shows the ongoing effects of wider economic headwinds and the limitations they have placed on retail visits, but also the unique strength of the brick and mortar retail environment in 2021 that serves as the comparison,” Placer.ai’s Ethan Chernofsky says. Another bright spot: the year-over-year visit gap for outlet malls declined by 1.1%, marking the first positive movement for this segment since April.
Chernofsky also warns that context is necessary to truly understand the data.
“The difficult comparison to a uniquely strong 2021 alongside the unique challenge of facing a variety of economic headwinds were always going to present a significant obstacle for August 2022 visit numbers,” he writes. “However, even with those issues, visits were only down 4.3% and 2.3% for the two formats respectively – a sign of continued relative strength, especially when comparing to certain retail segments that were traditional mall anchors. This indicates that steps malls have taken to diversify their tenant mix and push for more experience and dining oriented options are resonating with audiences.”
Parsing the weekly data also provides cause for optimism, he says. All three segments ended August more strongly than they started the month, with indoor malls and open-air centers posting their strongest week year-over-year since the week of June 27, with visits to open-air lifestyle centers up 3% in that period. Outlet centers posted their strongest year-over-year performance since the week beginning April 18
“With Labor Day weekend ahead and the three mall segments all trending in the right direction, there is real reason for optimism,” Chernofsky says. “The sector could be en route to a recovery from the unique effects of the economic headwinds that have limited retail performance in 2022. The timing, ahead of a critical holiday retail season, could mean that malls and their tenants end 2022 on a high.”
Earlier this month, Simon Property Group, the nation’s largest mall owner, reported strong occupancy and leasing gains in the second quarter. The REIT said 40% of its deals were made with new tenants lining up to fill mall space at its properties. Simon posted record retailer sales of $746 per square feet at its malls and outlets combined in Q2, a 26% increase from last year.