How Apple is changing America’s malls forever

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Why visit the Apple Store when you can get stuff deliver same day?
Apple Stores are the new department stores. Photo: Foster + Partners
Photo: Apple

I haven’t been to a mall in ages, except to go to an Apple Store. Turns out I’m not alone. Apple Stores have replaced the department stores of yore as the main driver of mall traffic.

In a new report on the Apple Store effect on the malls of America, The Wall Street report notes that a single Apple Store will lift sales by 10% in any mall in which it operates, at least according to Green Street Advisors, a real-estate research firm. That gives Apple the negotiating room to pay no more than 2% of sales per square foot in rent, compared to 15% for most mall tenants.

It wasn’t always this way. Department stores used to be the most important stores in a mall. Stores like Macy’s and Sears anchored malls on each end, and were either owned outright by their parent companies or paid no rent except for slight fees to maintain common spaces. That was how powerful their draw was.

But department stores in the Amazon age have fallen on hard times, and they are no longer enough to anchor America’s malls financially.

“As department stores close, Apple is replacing them as the main driver of traffic to the mall,” said Raymond Cirz, chairman of Integra Realty Resources, a real-estate valuation and consulting firm.

In fact, Apple Stores are so good at driving traffic that malls are actually using Apple as a way of putting a screw to other tenants to pay more rent. It’s become so bad for other tenants that they’ve started asking malls to exclude Apple from mall sales when calculating rents, similarly to the way they used to exclude department stores.

Just another small way in which Apple is changing retail in America, along with everything else.

Source: Wall Street Journal

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