Men and women shop at Khan Shatyr Mall in Astana, Kazakhstan.

A number of solutions have been introduced in recent years to save the American mall. The list includes adding residential units, office space, fitness centers and even schools to replace the shuttered stores.

While the results have been mixed, many analysts agree that the evolution of the mall is imminent.   

Those enormous boxes were built at a time when it made more sense to fill them with retail. That whole equation has changed,” said Simeon Siegel, retail analyst at Nomura Securities. “I don’t think there will be a single older mall that is 100 percent retail.”

Brookfield Property Partners, which recently acquired GGP, a former real estate firm, has about 125 malls in its portfolio. The company has plans to redevelop about 100 of those malls, spending between $800 million and $1 billion a year over the next several years on the endeavor. In the future, none of the malls will be exclusively retail. 

“It’s really just a question of timing,” Brian William Kingston, president, chief executive officer and global chief investment officer of Brookfield said during Thursday’s third-quarter conference call. “Introducing other uses and effectively turning them into mini cities is really how to future-proof all of these assets.”

The company reported funds from operations — the standard yardstick for financial real estate companies — of its core retail operations of $146 million in the quarter ended September 30, up from $128 million during the same period last year, crediting the increase to the acquisition of General Growth Properties and its portfolio of malls. Kingston added that “virtually all 100” malls will have a mixed-use element when the project is complete, and noted that roughly 90 percent of GGP’s value comes from its collection of malls. 

Brookfield added fitness centers to malls in Oklahoma City and Houston this year and Kingston said interest from e-commerce store owners wanting to set up physical stores is growing. 

How well the malls perform depends largely on location, said Amanda Nicholson, a professor of retail practice at Syracuse University.

“Not all mall real estate is the same,” she said. “If the mall is in the right place, it allows for new use.”

Nicholson pointed out that mixed-use malls have actually been around for longer than most people realize. First, cinemas were introduced into malls, then came restaurants. In the early 2000s, a mall in Syracuse, N.Y., was converted into a car dealership called Driver’s Village. Now large anchor tenants, traditionally a department store, are moving out as retail shifts online. In comes entertainment complexes, medical offices and senior centers.

“If they can do something interesting there is actually an opportunity to make money,” Siegel said. “It depends on where they are and what they’re looking to do. At the core of what this is, it’s property that is now being repurposed. You cannot simply just throw something into a giant closed J.C. Penney.”

While in-store shopping still makes up a significant percentage of retail, mall traffic in particular has been on a steady decline for years, Siegel said, attributing the decline to the mass number of retail bankruptcies in recent years.

Sears Holdings Corp., Bon-Ton, Nine West and Claire’s were just some of the retailers to declare bankruptcy this year. In 2017, Toys ‘R’ Us, True Religion and The Limited did the same. Aéropostale Inc. and American Apparel Inc. were on the list of retailers to declare bankruptcy in 2016.

“The heyday of the mall is over,” Nicholson said. The ones that will survive, she said, will not only be in the best locations, but will offer the best assortment of goods.

“You can’t be a second-class mall anymore to survive,” she said.

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