U.S. Retail Market Shrinks as Southeast Asia Sees Mall Growth

The U.S. retail property market has experienced a significant decline, with only one mall—Mall of America near Minneapolis, Minnesota—among the world’s top 20 largest shopping centers, according to recent data. This stark contrast highlights a broader crisis in the American retail sector, driven by e-commerce, financial struggles of department stores, and the pandemic’s impact, which analysts describe as a “retail apocalypse.”

Why Is the U.S. Retail Sector Struggling?

The number of fully enclosed malls in the U.S. fell from around 2,500 in the 1980s to 700 last year, according to the National Association of Realtors. The decline accelerated after 2017, as millions of square feet of retail space were demolished, much of it vacant. “Overbuilding was a deeper driver” of the crisis than e-commerce, according to Principal Asset Management. Rising construction costs and competition from other real estate sectors have further limited new developments.

How Does Southeast Asia’s Retail Market Compare?

While the U.S. grapples with shrinking malls, Southeast Asia has emerged as a hub for large retail spaces. The region hosts four of the world’s 10 biggest malls, with Malaysia, Thailand, and the Philippines accounting for 13 of the top 20, per global rankings. Bain & Company projected that private consumption in Southeast Asia could grow 8% annually, reaching $5 trillion by 2035, fueled by a growing middle class and urbanization.

What Economic Forces Are Shaping Retail Trends?

Despite Southeast Asia’s growth, the region faces challenges, including energy shocks linked to its reliance on Middle Eastern oil and gas imports. The International Energy Agency noted that Southeast Asia, home to 9% of the global population, is expected to account for 20% of projected global energy demand growth over the next decade. Meanwhile, rising diesel prices have hit Filipino farmers hard, exacerbating financial strain in the agricultural sector.

Why Does This Matter for Global Retail?

The U.S. retail crisis underscores shifting consumer behavior and economic vulnerabilities, while Southeast Asia’s resilience highlights the role of infrastructure investment and demographic trends. Analysts suggest that the U.S. may need to rethink retail strategies, whereas Southeast Asia’s growth could influence future commercial real estate development globally.