As anyone who's recently been to their local shopping mall knows: the mall is NOT dead, but it is changing.
The International Council of Shopping Centers (ICSC) reports that mall occupancy at the end of 2013 was back to pre-recession levels, at 92% on average, and sales per square foot and net operating income had reached record highs.
"The mall sector is doing very, very well," says Michael Kercheval, president and CEO of the ICSC.
Key to the rebound: a lack of new supply coupled with growing demand. "Shopping center supply is at record lows ... and demand is up, " explains Kercheval. "During the first quarter there were over 2,000 announced store openings amongst retailers.... Retailers want to open more stores and there's not more space."
In addition, mall owners and operators are renovating and redesigning existing malls to make them more appealing to shoppers, offering quality dining, entertainment and other services such as children's play areas, movies, libraries and municipal offices, according to the ICSC. Malls are also integrating with online apps for store pickups and returns and same-day delivery, and they're becoming more eco-friendly.
Some malls are even being reconfigured as new downtowns, according to Ellen Dunham-Jones, a professor of architecture at Georgia Tech.
Kercheval doesn't expect many new malls will be built in the near future despite the rebound. "The capital markets have been fairly constrained in supplying new construction lending, and communities have slowed down on zoning for new retail." Moreover, he says, it can take as long as seven years from conception to open a new shopping center.
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