Gen Z Is Bringing Shoppers Back to Malls — A Second Life for Retail Real Estate

For years, the rise of e-commerce seemed to signal the slow decline of traditional shopping malls. Online platforms promised convenience, endless product choices, and home delivery, leading many analysts to predict that physical retail spaces would gradually lose their relevance.

Yet a surprising shift is taking place. Around the world, Generation Z—young consumers born roughly between the late 1990s and early 2010s—is rediscovering the appeal of in-person shopping. Instead of replacing physical stores, online retail has begun to coexist with them. The result is a renewed interest in shopping centers, lifestyle malls, and mixed-use retail developments.

For real estate investors and developers, this shift may signal a second life for retail real estate, including in markets like the Philippines where malls remain central to urban life.

Why Gen Z Prefers Physical Shopping Experiences

Unlike older generations who gradually transitioned from physical stores to online shopping, Gen Z grew up in a fully digital world. Ironically, this constant exposure to online platforms may be one reason many younger consumers are drawn to physical retail experiences.

Shopping malls offer something the internet cannot easily replicate: a social and sensory experience. Visiting a mall allows shoppers to interact with friends, explore new brands, try products before purchasing, and enjoy entertainment options in a single location.

For many young consumers, malls function as more than just retail spaces. They are social hubs where people gather to dine, watch movies, attend events, or simply spend time with friends. This social element has become a major driver of renewed foot traffic in shopping centers.

Retailers are responding by transforming stores into experience-driven spaces rather than simple product display areas. Many brands now emphasize interactive showrooms, pop-up events, and immersive retail environments designed specifically to attract younger audiences.

The Rise of Experiential Retail

The concept of “experiential retail” has become a key strategy for malls seeking to stay relevant in the digital age. Instead of competing directly with online shopping on price or convenience, malls are focusing on creating environments where visitors can enjoy unique experiences.

Restaurants, entertainment venues, fitness centers, and lifestyle services are taking up larger portions of mall floor space. Retailers are also introducing interactive elements such as live product demonstrations, in-store workshops, and community events.

This shift has turned many malls into multi-purpose lifestyle destinations rather than purely shopping locations. The more diverse the experiences offered, the more time visitors spend within the development.

Longer visitor stays typically translate into higher spending, which benefits both retailers and property owners.

What This Means for Retail Real Estate

The renewed interest in physical shopping has important implications for retail property markets. While weaker malls in some countries have struggled, well-located and modern shopping centers are seeing improved foot traffic and stronger tenant demand.

Developers are increasingly designing projects that combine retail, residential, office, and entertainment functions in a single integrated development. These mixed-use environments create built-in customer bases while offering residents and workers easy access to shopping and leisure facilities.

For investors, this trend suggests that retail real estate is evolving rather than disappearing. The most successful projects are those that adapt to changing consumer behavior by focusing on lifestyle, convenience, and community experiences.

Why the Philippines Is Uniquely Positioned

Few countries embrace mall culture as strongly as the Philippines. Large shopping centers are deeply integrated into daily urban life, serving as places not only to shop but also to socialize, dine, and escape the tropical heat.

Major developers such as SM Prime Holdings, Ayala Land, and Robinsons Land Corporation have spent decades building some of the largest and most sophisticated malls in Southeast Asia.

In cities like Manila, Cebu, and Davao, malls often function as central community spaces. They house restaurants, offices, cinemas, supermarkets, banks, and even residential towers.

Because of this deeply embedded mall culture, the return of younger shoppers to physical retail environments could reinforce the long-term value of these properties.

The Role of Social Media in Mall Culture

Another interesting factor driving mall visits among Gen Z is social media. Platforms such as Instagram and TikTok have turned shopping trips into shareable experiences.

Stylish cafes, visually striking store displays, and unique interior designs often become social media content. As a result, malls that create photogenic environments and trendy retail concepts can attract significant online attention.

Developers increasingly recognize this dynamic. Many modern shopping centers incorporate aesthetic architectural elements, themed events, and lifestyle spaces specifically designed to be shared online.

In effect, social media has become a powerful marketing tool for physical retail spaces.

Retail and Real Estate Investment Opportunities

For property investors, the revival of mall culture among younger consumers suggests several emerging opportunities.

Retail spaces in well-located shopping centers may continue to attract strong demand, particularly when integrated with residential and office developments. Lifestyle districts that combine dining, entertainment, and retail could also see growing popularity.

Mixed-use developments are especially appealing because they create multiple revenue streams from retail leases, residential sales, office rents, and hospitality services.

As urban populations grow and younger generations seek social experiences outside their homes, these integrated developments may become increasingly valuable assets.

The Future of Shopping Malls

While e-commerce will remain an important part of the retail landscape, physical shopping spaces are proving more resilient than many analysts once predicted.

Rather than disappearing, malls are evolving into community hubs that combine retail, entertainment, dining, and social interaction. This transformation aligns closely with the preferences of Gen Z consumers, who value experiences as much as convenience.

For the Philippine property sector, the continued relevance of malls supports the long-term value of retail real estate. Developers that adapt to changing consumer habits—by prioritizing experience, design, and mixed-use environments—are likely to remain competitive in the years ahead.

The idea that online shopping would completely replace malls now appears overly simplistic. Instead, a new balance is emerging between digital commerce and physical retail experiences.

Gen Z shoppers are helping drive this shift by rediscovering the value of visiting stores in person, particularly when those stores offer engaging and social environments.

For real estate investors and developers, this trend suggests that retail property is not a dying sector but one that is evolving rapidly. In markets like the Philippines, where malls already play a central role in urban culture, the renewed popularity of in-person shopping may give retail real estate a promising second chapter.

Source: Ziggurat Real Estate

The reinvention of the Philippine mall

With more than 70% of the country’s economy generated in household consumption, many consider the Philippines a consumer-driven economy. This fact is magnified by the nearly 1,000 malls present in the country, which only goes to show the Filipinos’ reverence for shopping and dining out as something they do to relax and can’t live without. For decades, malls in the Philippines have been a signifier of progress in the area it is built, while providing a social hub and refuge from the country’s scorching heat.

These traditional malls that were once defined primarily by department stores, fashion boutiques, and food courts, however, are slowly being phased out by developers in favor of multi-functional commercial hubs.

“A traditional mall is primarily retail- or shopping-driven, anchored by supermarkets or department stores, with fashion concepts and some food-and-beverage (F&B) establishments and specialty stores. It is also usually an enclosed box-type format,” Rockwell Land Corp. Vice-President for Retail Development Christine T. Coqueiro said.

“While a multi-functional commercial hub highlights the idea of blending work and play. These are developments that weave together shopping, dining, living and working. Its goal is to give customers a unique experience.”

Even though the pandemic accelerated this development, experts have predicted this phenomenon to happen. While data for Philippine malls are scarce in this area, retailers in the United States are expected to close up to 80,000 stores by 2028, according to financial services firm UBS Global. Perhaps more concerning, data from Capital One Shopping Research predicts that up to 87% large shopping malls will close over the next decade.

Several factors can be attributed to this trend, the most significant of which is the rise of online shopping. For some, online shopping is much more convenient than going to a traditional mall, especially if one is looking for a particularly elusive item. Rather than walking around a mall for hours searching, it’s typically straightforward to find similar products through online stores without the hassle of spending money on gas or stuck navigating large crowds.

Online shopping is slowly integrating the traditional mall’s social features as well. It is true that friends and families could still meet, visit the food court, and see a movie together in traditional malls. But, due to the younger generations’ preference to connect through social media and online games, malls are somehow set aside as a primary place to socialize. Today, social media platforms have become central to digital socializing, and social selling has emerged as a popular online shopping experience.

Another factor for this shift is the increasing cost of operating brick-and-mortar stores compared to e-commerce sites. Conducting business in a brick-and-mortar store comes with significantly higher expenses, including rent, utilities, staffing, and day-to-day maintenance. Thus, the rising costs of operating physical retail spaces are prompting many brands to abandon malls and shift toward e-commerce platforms instead.

This has pushed malls to redefine themselves into commercial spaces or mixed-used developments that meet diverse needs of the market.

“We have already started to veer away from the very traditional box-typed mall formats already,” Ms. Coqueiro explained. “With stiff competition, there’s a need to get creative and set ourselves apart from the rest. While it was the pandemic that accelerated e-commerce, its end is what drove more experience-driven shopping concepts — thus giving rise to more multi-functional commercial hubs. A great example of this would be The Proscenium which is home to an office building, a performing arts theater, residential units, a fashion school and restaurants and bars. The area feels alive and vibrant from the wee hours of the morning until late in the evening.”

Due to these factors, mall owners are pursuing strategies to evolve along with the retail environment, according to a study conducted by the International Economic Development Council (IEDC). Traditional malls still have strong fundamentals that make them appealing to developers, such as their locations in mature markets, minimal direct competition, and access to robust regional transportation networks, including state and local highways.

Ms. Coqueiro also added that the focus, format and key performance indicators of the two concepts are completely different, as they have varied purposes. Malls are primarily focused on revenue and traffic, while commercial hubs are more experience-driven.

“[Mixed-use developments] are great for retail/F&B establishments because with office employees and residents as the immediate catchment, there is a captive market. And it is a market that usually has a strong affinity for the retail and the area as a whole since there is that feeling of ownership and belonging. Having the three elements present — live, work, and play — contributes to the profitability of this format,” she expounded.

This distinction in focus and purpose highlights the growing emphasis on experience-driven environments, setting the stage for a deeper look at how these spaces prioritize lifestyle over mere transactions.

“It’s all about the unique lifestyle experience that these spaces bring to the customers, rather than the more transactional environment that a traditional mall format offers,” Ms. Coqueiro said.

In addition, IEDC’s analysis of nearly 400 malls that have closed since 1980 has found that none have ever reopened in their original form. Instead, developers have been forced to rethink and repurpose these massive properties. Nearly a third were renovated and comprehensively re-tenanted, though with mixed results. Around 18% were demolished and replaced with new retail formats, most commonly big-box power centers. Another 11% were integrated with other uses to improve occupancy levels, essentially making them mixed-use developments.

“One of the biggest challenges is to make sure that you know exactly what your immediate market wants so that all elements that you put in the commercial hub will thrive and feed off each other, creating that energetic and engaged environment,” Ms. Coqueiro commented.

As developers continue to reimagine these spaces rather than abandon them altogether, the question now shifts from whether traditional malls will survive to how they will adapt within an increasingly experience-driven retail landscape.

“I don’t think traditional malls will completely disappear, especially in the Philippines where we have a strong mall culture. However, the malls will definitely evolve to incorporate spaces or pockets that encourage the same social environment that commercial hubs offer,” Ms. Coqueiro concluded.

Source: Business World

How Mall Culture Moved to the Center of Philippine Life

The Philippines, a country known for its vibrant culture and warm hospitality, has seen a significant shift in its social and economic landscape over the past few decades. One of the most notable changes is the rise of mall culture, which has moved to the center of Philippine life. This phenomenon can be attributed to several factors, including the country’s tropical climate, urbanization, and the multifunctional nature of malls.

Historical Context and Evolution

The concept of malls in the Philippines began to take shape in the 1970s with the establishment of Ali Mall, the country’s first major shopping mall. Over the years, malls have evolved from simple shopping centers to multifunctional spaces that cater to a wide range of needs. Today, malls are not just places to shop; they are community hubs where people gather, socialize, and access various services.

Climate and Convenience

One of the primary reasons for the popularity of malls in the Philippines is the country’s tropical climate. With temperatures often soaring and the rainy season bringing heavy downpours, malls provide a comfortable, air-conditioned environment where people can escape the heat and rain. This convenience has made malls an attractive destination for Filipinos looking to spend their leisure time in a comfortable setting.

Urbanization and Accessibility

As the Philippines has urbanized, the development of malls has kept pace with the growing population in cities. Malls are strategically located in urban centers, making them easily accessible to a large number of people. This accessibility has made malls a central part of daily life for many Filipinos, who visit them not only for shopping but also for dining, entertainment, and even accessing government services.

Multifunctional Spaces

Modern malls in the Philippines are designed to be all-in-one destinations. They house a variety of establishments, including supermarkets, restaurants, cinemas, gyms, medical clinics, and even government offices. This multifunctionality makes malls a convenient place for people to accomplish multiple tasks in one trip. For instance, a person can shop for groceries, pay bills, watch a movie, and have a meal, all without leaving the mall.

Social and Cultural Hub

Malls have also become important social and cultural hubs in the Philippines. They host events, concerts, and exhibitions, providing a space for community engagement and cultural expression. Additionally, many malls hold Catholic masses on Sundays, further integrating them into the social fabric of Filipino life. This role as a community center has strengthened the bond between malls and the people who frequent them.

Economic Impact

The economic impact of malls in the Philippines cannot be overstated. They provide employment opportunities for thousands of people and contribute significantly to the local economy. According to data provided by the Philippine Retailers Association, shopping malls account for about 15% of the country's GNP and 33% of the entire services sector. The presence of malls has also spurred the growth of surrounding businesses, creating a ripple effect that benefits the broader community.

Conclusion

The rise of mall culture in the Philippines is a testament to the adaptability and resilience of Filipino society. Malls have become more than just shopping centers; they are integral parts of daily life, providing comfort, convenience, and a sense of community. As the country continues to develop, it is likely that malls will remain central to the social and economic landscape of the Philippines.

Source: ZRE