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Shopping center: ”the reports of my death are greatly exaggerated”

WWhen I speak to investors, especially U.S. based, nobody wants to hear about shopping centers. During the past two years, I’ve met only one investor who was looking for shopping centers and thought they are a very good investment category right now. Yes, there are many question marks around the future of shopping centers, but as always, uncertainty also creates opportunities. Therefore I think it’s worth spending some time figuring out the future.

America, the home of the mall since the inception of the whole concept, everything new has come from the USA. Therefore, it’s the first and best place to look for future trends. Investors in America are terrified of the slowing sales and closing malls. “Online sales will kill the mall” is the slogan of the day. But there are other factors influencing the number of malls and shops.

The shopping center GLA (Gross Lettable Area) per inhabitant in the USA has always been growing. In 1990 there was 1700 sqm per 1000 inhabitants and 2018 the number was 2400 – an increase of 40%. As in any other business, there is a saturation point somewhere where the floor area per customer exceeds the demand. As the median household income grew only 15%, it is very likely that there are too many shopping centers in the States. The weak will die in the harsh competition. Even if many shopping centers are closing down, the GLA has still remained stable during recent years, and we haven’t seen a decline yet.


Comparing the GLA of Europe and the USA illustrates the huge cultural differences both in consumer behavior and urban design. The shopping center GLA in Europe is just 10% of the GLA in the USA. In some countries, the urban planning system prevents the construction of shopping centres, but also the traditional way of shopping doesn’t support them. The Nordics are different from the rest of Europe, GLA is more than twice the average European GLA. Norway is the king of European shopping center GLA with 800 sqm / 1000 persons, which is still 60% less than in the USA. I haven’t found any research regarding why the GLA is so high in the Nordics, so I need to rely on my own reasoning. It’s pretty simple: the climate! Who wants to push carts in the snow, try to find a parking lot where your car might get stuck in the snow or carry the goods outside with icy rain, or hard winds in your face?

People seek convenience in their everyday life. It is quite understandable that this also applies to shopping. Online trade is part of this phenomena, but so are shopping centers. If you need to buy more than one category of item, it still makes sense to go to a place where you can shop for them all with one stop. The original idea of shopping centers will not go away until all trade is online, which will most likely never happen. In my opinion, the enormous waste of energy expended on the unnecessary moving of goods and the destruction of returned goods is going to be a big issue for online traders in future. See my previous blog on retail sustainability for more detail.


Convenience is the key to success. The location must be easy to reach by public transport and by car. The parking must be spacious and well lit. That is a good starting point for a convenient experience of – what exactly? Spending a Saturday with the family or just getting the goods you need quickly? Both types of customers need to be served, therefore a good range of restaurants and other services are needed, but the key is, and will always be, the shops. A shopping experience that no online store can provide. The sales of the Finnish shopping centers are still growing despite all talk of declining retail sales – last year 0,7% which is not huge, but it is still positive!

Risto Vuorenrinne

Risto Vuorenrinne

+358 50 313 9350