Shoppers Prefer Staying Outdoors. That’s More Trouble for Malls.

National chains are accelerating their exit from malls for other types of retail locations, signalling more trouble for malls as consumers show a growing preference for shorter, more convenient shopping experiences.

Jewellers, shoe stores and other specialty retailers are among the operators making the shift, indicating they will continue opening at outdoor, non-mall locations such as grocery-anchored shopping centres and strip malls after finding that they perform better and typically save on costs.

“These retailers are going to grow more confident that they’re barking up the right tree as they continue to see quarter after quarter after quarter of outperformance in their off-mall locations,” said Brandon Svec, national director of U.S. retail analytics for data firm CoStar Group.

Bath & Body Works, which for years sold scented soaps and body creams to mall goers, is on track to open about 95 new locations for the fiscal year ending in February, while closing about 50, primarily in struggling malls. More than half of its 1,840 stores in the U.S. and Canada are now located outside of enclosed shopping centres.

Foot Locker said it is aiming to operate half of its North American square footage outside enclosed shopping centres by 2026, up from 36% in the third quarter.

Signet Jewelers, which owns brands such as Kay Jewelers, Zales and Jared, is closing up to 150 locations in the U.S. and U.K. by mid-2024, nearly all in traditional malls. Company executives told investors last year that off-mall locations had stronger sales margins, and about 60% of its total square footage is now outside malls.

Not all retailers are exiting from malls. Publicly traded mall owners Simon Property Group and Macerich, which primarily own higher-end centres, have reported record-high leasing volume over the past year as retailers such as Hermès, Warby Parker and Alo Yoga have taken space.

But foot traffic to U.S. malls was down 4% on average in 2023 from the prior year, and about 12% lower than 2019 levels, according to real-estate data firm Green Street.

Low-end malls have seen the biggest drops in customer visits, partially because department stores have closed in higher numbers at these properties since 2017.

Online-sales data have also helped retailers pinpoint locations for successful stores with better accuracy than in the past.

“You know where your customer is buying and where they live,” said Scott Lipesky, chief financial and operating officer for Abercrombie & Fitch. “We’re looking at this digital shipping data, and we just plop a store down in the middle of it.”

Recently, Abercrombie & Fitch has been opening in city shopping districts in an effort to get closer to younger millennials and recent college graduates.

Visits to outdoor shopping centres have increased since the pandemic as the rise in remote work has given people the time and flexibility to run errands more frequently and closer to home.

Outdoor shopping and strip centres also appeal to retailers who are increasingly allowing customers to pick up or return items bought online, CoStar’s Svec said. These shoppers want to get in and out of stores quickly, and not spend time navigating large parking garages or walking across the mall.

Increasing demand for open-air space has driven up shopping-centre rents to nearly $24 a square foot, the highest level since real-estate firm Cushman & Wakefield began tracking the metric in 2007.

But moving out of malls can still help retailers cut costs, particularly the common-area and maintenance charges that landlords pass on to tenants to help pay for the property’s upkeep.

Owners of enclosed malls are saddled with a host of additional expenses compared with open-air shopping centres, such as keeping the indoor walkways clean, repairing the heating and ventilation systems and maintaining the restrooms.

“It’s a lot more than blowing leaves out of a parking lot,” said Jim Taylor, chief executive of Brixmor Property Group, a real-estate investment trust that owns about 365 shopping centres across the U.S.

Taylor said he started to notice traditional-mall tenants moving into Brixmor centres several years ago. More recently, he has seen an increase in the types of retailers making the move, including those in the beauty, footwear, jewellery and housewares business.

“We’re seeing them come into the open-air centres because of the proximity and convenience to the customer,” he said.

Capital city home prices have continued to rise in April despite higher interest rates and ongoing uncertainty about the outlook for inflation and the global economy.

Growth rates, however, have eased, reflecting the usual subduing effect of the lengthy April holiday month.

The national capital city median house price increased marginally by 0.2% over the April quarter to $1,297,798 compared to the March quarter, according to the latest data from My Housing Market.

Annual national house prices are, however, 10.2% higher and have now increased for 14 consecutive months.

Most capitals reported house price increases over the month, with Brisbane and Perth the top performers, each higher by 1.3%, followed by Hobart and Darwin, both up 1.2%, Adelaide up 0.2%, with Sydney steady. Melbourne prices, however, fell 0.7%, while Canberra prices fell 1.7%.

Most also report strong annual house price growth in excess of 10%, with Perth, Darwin, Brisbane, and Adelaide clearly the highest, up by 25.7%, 21.6%, 20.0% and 14.2% respectively.

National unit prices were also higher in the April quarter than in the March quarter, rising by 0.5% to $728,459, and have now increased by 8.2% compared to the April quarter 2025 result.

Brisbane was the top monthly performer in April, with unit prices rising by 1.7%, followed by Perth up 1.0%, Melbourne and Canberra each up 0.9%, Adelaide up 0.6%, and Hobart up 0.1%. Sydney unit prices were steady over the month; however, Darwin unit prices were down 0.8%.

Similar to houses, Perth, Brisbane, Adelaide and Darwin continue to record the highest annual unit price growth to April 2026, at 30.1%, 27.8%, 12.9% and 11.8%, respectively.

Dr Andrew Wilson. Photo: Giovanni Portelli Photography

Analysis

Capital city housing markets have generally reported higher home prices in April, although growth rates have eased compared to March.

Easing housing markets reflect the usual dampening effects of the lengthy April holiday month, although higher interest rates and increased uncertainty about the economic outlook have weighed on affordability and confidence.

Robust annual home price growth, however, continues for most capitals with Perth, Darwin, Brisbane, and Adelaide still reporting boomtime results.

Although 2026 is still set to see home price growth generally in most capitals, the rising spectre of further interest rate increases and elevated uncertainty over the outlook for inflation and the economy will continue to dampen affordability and confidence.

Brisbane, Adelaide, Perth and Darwin, however, are again set to lead capital city outcomes for both houses and units, but are unlikely to match the extraordinary 2025 results.

Brisbane, Perth and Adelaide continue to record higher median house prices than Melbourne, with Perth now closing in fast on Brisbane and set to lead all but Sydney.

Underlying drivers will continue to support overall housing market activity, although the outlook for RBA interest rates is more problematic, with inflation set to accelerate and economic activity to decline as a consequence of the recent sharp increase in oil prices.

The economy, however, remains strong, with a steady, still-low jobless rate, falling unemployment, continued robust job growth, and a high participation rate.

Housing demand continues to outpace a low and diminishing housing supply, and although high post-COVID migration levels have recently eased, numbers remain strong and will add to chronic housing undersupply, supporting high rents and low vacancy rates generally in capital city rental markets.

Following a period of easing in rental growth, the latest data continue to show extraordinarily low home rental vacancy rates and clear signs that rents are on the rise again.

High rents and higher prices continue to provide clear incentives for first-home buyers and investors chasing solid investment returns.

Ongoing government initiatives to support first-home buyers will increase demand and place further upward pressure on prices.

Capital city housing markets generally recorded higher house and unit prices over 2023, 2024 and surged over 2025, fuelled by rising buyer and seller confidence through sharp cuts to interest rates.

Although 2026 is again likely to see higher home prices, significant uncertainty has recently emerged about the near-term outlook for already-high interest rates and economic activity, which will generally dampen buyer and seller confidence.

Early signs are emerging in the recent weakening of home auction market clearance rates, particularly in Sydney and Melbourne.

Shoppers Prefer Staying Outdoors. That’s More Trouble for Malls.

Bath & Body Works, Foot Locker are among retailers ditching malls for strip centers, other shopping outlets

Australia’s capital city housing markets have continued to record price growth, although higher interest rates and economic uncertainty are beginning to temper momentum.