Dive Brief:

• Mall operators Taubman Centers and Westfield are spending hundreds of million to renovate their upscale outposts in Los Angeles. 
• Malls of Beverly Center’s and Westfield Century City’s caliber generate an average of $965 in sales per square foot, according to real estate research firm Green Street Advisors. 
• About 15% of America’s malls will close or be repurposed in the next 10 years due to e-commerce and a decline in traditional department stores, Green Street Advisors said.

Dive Insight:

Two ultra-high-end malls in Los Angeles, Beverly Center and Westfield Century City, will soon undergo extensive renovations in a race to stay chic. Mall operator Taubman Centers is planning a $500 million overhaul of the eight-story Beverly Center, while competitor Westfield will spend $800 million to remake outdoor shopping mall Century City.

Located near Beverly Hills, both malls offer a host of high-end retailers and bring in lots of revenue for their operators. But it costs money to make money, and these and other “exclusive” malls are in constant redevelopment. Competing operator Simon Property is spending $1.5 billion to redevelop upscale properties including the Philadelphia-area King of Prussia Mall and Houston’s Galleria.

While renovations disrupt tenants’ cashflow in the short term, they often deliver higher foot traffic to mall tenants and higher rents for developers. With an estimated 15% of the country’s malls in danger of shutdown or redevelopment in the next 10 years, such high-end malls may be the last ones standing, as more mainline customers eschew department stores in favor of online sellers. 

Mall owners across the U.S. are reconsidering the approach of their properties, the Wall Street Journal reported last month, in many cases replacing departing anchor stores with other businesses and creating a less retail-heavy, more mixed-use space. Malls across the country are also losing their anchor retailers as Macy’s, Sears, and other department stores continue to close locations. 

Some of the most successful malls in the U.S. these days have morphed into spectacular destination spots. The quintessential example may be the sprawling Grove in Los Angeles, one of the highest-grossing shopping centers in the country and a clear departure from the traditional American mall. The Grove and malls like it offer a wide variety of amenities and entertainment—not just movies (though there is a theater there) but also live shows. There’s additionally a free trolley, a farmers market and a park in addition to a variety of retail and restaurant options.