We share insight on why malls won’t be untouched by the trend for micro-fulfilment and how the wealthy will change their holiday habits post-pandemic.

Dawn of the ‘dark mall’

Back in June, Coresight Research released a report that predicted between 20,000 and 25,000 retail closures in the US by the end of 2020; of that number it ‘anticipate[s] that 50-60 per cent will be mall-based’, promoting ‘an overdue rationalization of mall space’. Not entirely fresh data, but necessary context for the news that Amazon is in discussion with Simon Property Group – the largest mall owner in the country – about taking over space left by the withering of department stores such as Sears and J C Penney. In their place the e-commerce giant plans to install distribution hubs, taking advantage of malls' close proximity to centres of population.

Amazon may prove to be a more reliable source of income, but the swapping of anchor tenants – big-name retailers whose ability to draw footfall benefits stores around them – for faceless warehouse space will significantly shift the ethos of the host mall. ‘To replace department stores, mall owners considered schools, medical offices and senior living,’ Camille Renshaw, chief executive officer of brokerage firm B+E, told the Wall Street Journal. ‘With the current pandemic, industrial is the only thing left now.’ That’s before you consider that many malls – like Hong Kong’s H Queens – were already shifting their wider tenant mix in favour of experience-based businesses. Amazon’s proposal follows a new report by CBRE that just under 14 million square feet of big box retail space in the US has been converted to industrial space since 2017.

Home-county hospitality 

During our recent #FrameLive talk on the future of hospitality, Rob Wagemans, founder of Concrete Architectural Associates, predicted that hotel owners are going to have to switch from serving international travellers like business execs and concentrate on appealing more to their local communities. If Marriott’s latest earning call is any indicator, Wagemans was right. Marriott president and CEO Arne M. Sorenson revealed that ‘leisure travellers, particularly in resorts and drive‐to destinations’ had been key to its recovery in China. That’s for a brand that Robin Farley, lodging analyst at UBS, estimated produces 70 per cent of its revenue from business travel.

With EY predicting a 28 per cent decrease in flights by business travellers following the pandemic, Marriott will hope that that local leisure market can be sustained. For now, it seems car is king – meaning guests tend to be from a maximum 100-200 mile radius. Jan Freitag, SVP of lodging insights at STR says that the relationship between air travel and hotel bookings has ‘completely collapsed’ in the US. In a recent interview with Hotel News Now, Freitag explained that they’re only able to explain ‘one in five rooms sold as being connected to (air travel). The smaller ratio implied that that a lot of people are driving to their destination.’

Pandemic-safe holiday homes

In news that will worry both luxury hoteliers and those looking to gain a foothold in rural property markets, research by Knight Frank Global shows that the wealthy have a reignited interest in holiday homes. The survey, which covered 44 countries, found that 26 per cent of respondents said they were more likely to buy a second home due to the COVID-19 crisis. In an indication that the elite plan to use these as bolt holes in event of another pandemic, two-thirds said they would base their decision on where to buy based on different countries’ handling of the crisis.

‘Buyers are generally seeking three key factors; good broadband, quality healthcare and a property capable of generating a reliable income,’ explains Mark Harvey, head of international sales at Knight Frank. ‘We’ve seen Europeans take shorter holidays across multiple locations in recent summers, but I think we may see a return to the traditional European summer with families decamping for four to six weeks at a time and entertaining family and friends in one location. At the heart of this change in buyer attitudes is wellness and family, which is why I think such trends are likely to endure.’

Hero image: The Slaak Rotterdam, a Marriott hotel designed by HDVL Designmakers.