Sunday, June 14, 2009

Mall Space

by Bill McBride on 6/14/2009 03:40:00 PM

Here is an interesting short discussion on reusing mall space from Rob Walker in the NY Times Magazine: Repurpose-Driven Life

Talk of American infrastructure tends to focus on inadequacies: roads that need to be repaired or widened, bridges fortified, electrical grids updated. All the more striking, then, that America’s retail infrastructure — its malls, supercenters, big boxes and other styles of store-clumping — has come to be characterized by rampant abundance. This has been a decades-long trend. But it has taken the economic downturn, with chain stores liquidating, mall tenancy slipping and car dealerships scheduled for closure, to focus popular attention on the problem with our retail infrastructure: there is too much of it.

A recent book, “Retrofitting Suburbia,” by Ellen Dunham-Jones and June Williamson, notes that in 1986, the United States had about 15 square feet of retail space per person in shopping centers. That was already a world-leading figure, but by 2003 it had increased by a third, to 20 square feet. The next countries on the list are Canada (13 square feet per person) and Australia (6.5 square feet); the highest figure in Europe is in Sweden, with 3 square feet per person.
And that was in 2003 - before the most recent mall building boom began (see graph at bottom).

Mall CartoonFrom Italian cartoonist Giovanni Fontana (used with permission).

Here is his website, the vignettist's corner

Click on cartoon for larger image in new window.

Of course the housing bubble in the U.S. was much large than the mall bubble.

In 2005, investment in single-family structures hit a peak of $481 billion (all residential investment including multi-family and home improvement was $761 billion in 2005.)

Investment in malls peaked at $32.5 billion in 2007. So the mall bubble isn't anywhere near as big as the housing bubble in absolute numbers or potential negative impact on the overall economy.

Here is a graph of mall investment through Q1 2009 as a percent of GDP based on data from the BEA ...

Investment in Malls and LodgingInvestment in multimerchandise shopping structures (malls) peaked in Q4 2007 and is continuing to decline.

Note that the article above stated there were 20 square feet of retail space per person in shopping centers in 2003 - and that was before the more recent building boom. There is just too much retail space in the U.S.