The financial crisis and its aftermath have made financial planners nervous about taking on more risk.
And they are taking note.
“I think the big takeaway from the financial crisis is that you should be willing to take more risk in order to achieve more returns,” said Steven S. G. Wintrow, chief investment officer at Capital Alpha Partners.
“In the case of the mall, I would put the risk on a scale of 1 to 5.”
A mall is the nation’s second-largest retail center, after a mall in Chicago.
The Mall of America is located in the heart of the nation, nestled between the city of Detroit and the suburbs.
The mall has grown by more than 2 million square feet in the past 15 years, according to the mall’s annual report.
It is now home to more than 300 million square miles of retail space, and is considered one of the most diverse shopping centers in the U.S. According to Wintrows report, the mall has experienced an average return on assets of 4.6% per year for the past decade, compared with 3.9% for the S&P 500 index.
And the mall recently opened a new store in Orlando.
The financial center has a total of 1,600 stores and more than 30,000 parking spaces, which makes it among the busiest malls in the nation.
Widenings of the financial center’s footprint have helped attract retailers and investors.
“A lot of people, especially in the retail space that is coming up, are very excited about what’s happening in that area,” said Wintower.
“And I think a lot of that is just the fact that the mall is a great place to be and a great asset for a mall.”
Mall of the future in 2030?
The future of the Mall of Tomorrow is looking brighter, but many experts are skeptical that it will happen anytime soon.
According the Wall Street Journal, many analysts believe that the next decade will be the last decade of mall growth.
Mall of tomorrow will likely be the first wave of malls in America to start expanding into the suburbs and expanding into smaller cities, according a report by The National Association of Realtors.
But that could change.
In the future, the number of malls will likely continue to decline, said Wintel.
The average age of malls has been steadily declining since the late 1980s, said the Journal.
It’s expected that mall space will be nearly half what it is today by 2040, said Richard Siegel, director of the Center for Urban Business at the University of Pennsylvania.
But the mall still has a role to play in the overall economy, especially if malls are not built in places where there are a large number of people.
“The mall is going to be an important part of the fabric of our economy, and the fact it’s not here now is unfortunate,” said Mark Zandi, chief economist at Moody’s Analytics.
“There is going have to be some type of change, and that change is going on.”
And the malls may not need to build new buildings anytime soon, Wintel said.
In a recent study, the American Association of Retailing Banks estimated that mall expansion would increase retail employment by 4 million jobs, create 4,000,000 new full-time jobs, and increase total retail employment to 6 million by 2032.
“With all the growth, you’re going to have more shoppers in malls, which will have an effect on our retail sector,” said Andrew S. Tully, chief executive officer of the Chicago-based mall operator American Apparel.
“It’s going to impact our revenue, which is a very important component of the overall GDP of the United States.”