It had been a long time since Taneha Hopkins ventured out to a mall. The crowds seemed younger and younger, everything was available online anyway, and then such trips became even less attractive during a pandemic.
One day last week, the dialysis technician needed to get out, she said, and had lunch with a friend at The Cheesecake Factory at Towson Town Center.
“We decided to walk around the mall,” said Hopkins, 36. “It was an older crowd. It was just a nice day.”
The East Baltimore woman made a purchase at Victoria’s Secret. But other than meeting a friend or picking something up last minute, Hopkins doesn’t expect to change her mall shopping habits anytime soon.
“I’ll probably stick with online, or go to the outlets,” she said.
Like Hopkins, many people weren’t going to the mall as much even before the COVID-19 pandemic, as consumers bought online or headed to Target or Walmart instead, and department store anchors closed store after store.
When Gov. Larry Hogan ordered malls closed last March as the coronavirus swept into the state, an already cloudy future for such shopping centers grew more uncertain.
Shut completely until June, even the Baltimore area’s biggest regional malls haven’t been immune. The Mall in Columbia lost Lord & Taylor. Sears closed anchor stores last April at White Marsh Mall and Westfield Annapolis Mall. The parent of tween-focused apparel chain Justice filed for bankruptcy in July and closed three quarters of its stores, including at Harford Mall and malls in Annapolis and Columbia.
Brookfield Properties, which owns the The Mall in Columbia, Towson Town Center, Mondawmin Mall, The Gallery at Harborplace and White Marsh Mall, lost $2 billion last year.
But even as store closures, bankruptcies and losses piled up, some experts say the shopping mall is far from doomed. As coronavirus vaccines become more available and Baltimore-area students head back to school part-time after a year of virtual learning, business at area malls is picking up.Capacity restrictions for retailers were lifted statewide this month, though masking and distancing mandates remain.
On a recent weekend, the vast parking lot outside the vacant Sears at White Marsh remained empty. But elsewhere at the center, cars jammed lots. Inside, shoppers waited their turn to enter specialty stores with limited capacity.
“Overall, there is a future for malls,” said Neil Saunders, managing director of GlobalData Retail “The mall will not disappear entirely. But a lot of malls are under pressure, and many are going to have to evolve to survive. The weaker ones will not survive.”
That could be the fate for those that haven’t changed or seen significant investment in a decade or more. After pandemic shutdowns and revenue losses, it may be too difficult to catch up. Over the next two to five years, weaker malls could shut down or be replaced with new development.
“The pandemic has been particularly hard on the mall sector,” said Stephanie Cegielski, vice president of research for the International Council of Shopping Centers. “Malls were the last places to be reopened in most every state behind restaurants, which was harmful for retailers and property owners. They are trying to come back.”
Many face significantly higher operating expenses as they allow for sanitation and social distancing. A mall’s recovery will depend largely upon whether a particular community’s shoppers have recovered enough from their own financial woes.
But in a positive sign, Cegielski said, foreclosure numbers have not jumped, which means lenders are working with shopping center landlords, who in turn are working with tenants on rents. Mall closings during the last year remained at pre-pandemic levels.
U.S. mall occupancy has fallen for the past four years to about 88% now, just above the level during the 2008 recession. Property owners in the past have managed to stay in the black with centers at least 70% occupied, Cegielski said, but that threshold might have changed with higher operating costs during the pandemic.
Vacancies are being caused less by bankruptcies — which may not involve store closings — than by tenants’ hesitancy to sign new leases for existing or new space, Cegielski said.
“Shutdowns put everybody on edge, with the loss of revenue,” she said. “Tenants might not want to sign five- or 10-year leases.”
If trends continue, Cegielski said, the apparel shops that once filled most malls will likely be less prolific, giving way to more services, entertainment and high-growth brands.Retail uses now account for about 66% of shopping center space, down from nearly 74% five years ago, the shopping center council’s research shows. Non-food and non-retail’s share of leasable area in shopping centers has grown more than 33% over six years.
The developers of Hunt Valley Towne Center, a former mall reborn as a Main Street-style center in 2003, had planned to incorporate a mix of shopping, housing, office, entertainment and dining long before the pandemic.
Even though the Baltimore County center’s movie theater, Regal Hunt Valley, has been closed since March of last year, Greenberg Gibbons’ plans have progressed, including the signing of several non-store tenants. They include new restaurants, as well as a Onelife Fitness club above the Michaels and Home Goods that now occupy a former Sears store. MGH, a marketing firm, will be moving to space formerly occupied by bookstore Greetings & Readings.
MGH CEO Andy Malis said in an announcement that the mix of shops and restaurants would be attractive for his workers, “while also keeping our employees connected to the needs of our clients’ target audiences.”
Later this year, Greenberg Gibbons will start building senior housing and apartments to add to those built in 2016.
“We do want to make it a true town center,” said Brian Gibbons, the company’s chairman and CEO. “That was the plan, and it’s evolving over time … I think Hunt Valley is the playbook you will see.”
Recovery has been slower for Greenberg Gibbons’ Shops at Kenilworth, an enclosed mall that shuttered during the pandemic for about three months. The landlord has worked with all tenants there, as well as at other centers, to offer rent relief based on a percentage of revenue.
In its favor, Kenilworth has popular grocer Trader Joe’s as an anchor and is expanding a dining component featuring outdoor seating, Gibbons said. Felipe’s Mexican Taqueria Restaurant has opened and seafood restaurant The Gourmet at Kenilworth, the second location of the Catonsville Gourmet, is coming this spring.
Gibbons sees strong potential for grocery-anchored and neighborhood centers as well as those with discounters, and his firm recently announced plans to raise a $100 million private equity fund to acquire and reposition such centers throughout the East Coast, Southeast and Midwest.
But he believes malls anchored by department stores will face the biggest challenges and will need to re-anchor with mixed uses.
That’s been the evolution of The Mall in Columbia since its opening nearly five decades ago, with the center adding dining and entertainment to keep pace with increased residential use nearby.
The mall closed for months during the COVID lockdown and lost anchor Lord & Taylor in August after the upscale department store filed for bankruptcy, ending a 194-year run and closing its remaining stores.
While mall business has not returned to pre-COVID levels, mall managers have seen a strong response to new initiatives such as expanded curbside pickup, now offered outside three department stores and in three other spots, said Barbara A. Nicklas, the mall’s senior general manager.
Last fall, management provided additional tables, chairs and heaters to allow four restaurants in the mall’s dining cluster to expand outdoor seating. The concept proved popular and will be brought back in the spring.
And though The Mall in Columbia lost some stores over the past year, it gained an equal number back. Some tenants that held off on signing new leases early in the pandemic have since committed, including Warby Parker, which opened in January, and Under Armour, which is under construction. Lidl, a fast-growing discount grocer, will open in May on the lower level of a former Sears.
“Our goal is always to meet our customers where they are, whether that’s online, in a lifestyle center, an indoor mall, or a street-front shopping district,” Neil Blumenthal, Warby Parker’s co-CEO, said in an email. “With malls across the country evolving to serve a new generation of consumers, we wanted to expand our presence in the Baltimore area at shopping centers that are doing just that.”
The formerly online-only eyeglasses retailer has been opening physical stores over the past few years, including two Baltimore-area mall stores, the second of which opened in February at Towson Town Center. The retailer also has non-mall locations in Harbor East and Bethesda.
Juana Sherrill, a West Baltimore resident, said she drives out of her way to go to malls such as Arundel Mills or the Columbia mall to find favorite brands and food, such as Sephora and Chik-Fil-A. She’s continued her mall-going habits because she doesn’t always want to wait for online order deliveries.
“The pandemic does not stop me from going to the mall,” she said. “Am I afraid? No. Do I take precautions? Yes.”
Des Reilly, a managing principal of the restaurant group that runs Walrus Oyster and Ale House at the Columbia mall, said he and his partners were attracted to the high traffic numbers of a “town center” when they opened three years ago. Then the pandemic hit.
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But the community’s support of a locally owned restaurant made all the difference, and the restaurant never closed. With takeout orders increasing, the business has seen only a small sales drop in the past year.
Going forward, “we’re bullish on the mall and the town center,” Reilly said. “Restaurants have become anchors for malls. People still want to go out and eat.”
Saunders, too, believes malls still will have a role in the post-COVID world, as a “gathering place, a place to go and meet and socialize, and you still see people doing those things in reduced numbers.
“I don’t see that going away,” he said. “What’s the alternative? It’s sitting at home and ordering everything online. We need third spaces to gather and meet. And if we work from home a little more, we may need these third spaces even more.”
That’s the appeal of the mall for Beth Ashton, a Towson social worker who watched Wednesday as her 3-year-old son skipped around a planter at Towson Town Center. Ashton hadn’t been to an enclosed center since the start of the pandemic a year ago.
“We make little trips into stores here and there, but it got to the point I needed a big space for him to run around,” Ashton said. “It’s nice to be out of the house and see other people doing their own thing, too.”