Too Many Malls in Israel? Reckless Retail Planning?

Are there too many shopping malls in Israel? Can there ever be too many stores? Shopaholics would say no but store owners, franchisees and shopping mall owners might disagree.

In an interview in Globes from December 15, 2013, Sam Nezri, the owner of the network of shoe stores “Aldo” and “Spring”, boldly claimed that there are too many shopping centers in Israel.  He even went so far as to say that the main players in the construction of shopping malls have shot themselves in the foot by continuing to construct more and more malls.

Jerusalem Bus Station Mall
Jerusalem Bus Station Mall

Nezri claimed that in the past, when there weren’t that many shopping malls, rent was as high as $100 to $120 per sq. meter, (and back then each dollar was worth 4.25 NIS) and everyone paid because there was no choice.  There was just not enough retail space.

Now, he says, things are completely different. Due to continuing construction, there is too much retail space. There are no more waiting lists, and a lot of empty stores.

For example, in Beer Sheva, a city of about 200,000 inhabitants, there are 100,000 meters of retail space.  That is two meters per person, which is much higher than in most locations in the world.

According to Nezri, the correct thing to do would be to take existing malls and renovate them rather than build new ones.  He feels that the construction of the mega mall in Beer Sheva of 49,000 sq. meters by the Melisiron company was a mistake.  He believes that there is just too much retail space and therefore the mall owners are prepared to give better rental conditions to stores with well known products and logos.

The current situation, if Nezri is right, is good for the store owners, but not so much for anyone considering investing in malls or retail outlets.