It’s probably not what the fictional Robin Sparkles meant when she sang “Let’s Go to the Mall,” but these virtual developers have tapped a brokerage firm to lease up a digital mall.
Avison Young brokers are Decentraland-bound as metaverse developer Everyrealm hired the firm to be the exclusive leasing agent for MetaMall. The brokerage will be tasked with leasing out 121,000 square feet of digital retail space at the 364,000-square-foot MetaMall, located at coordinates 100,18 in Decentraland’s Fashion District, directly across from Metajuku, another retail development by Everyrealm.
With over 300,000 active monthly Decentraland users, Peter Johnson, who is leading the leasing efforts, said digital retail space has been getting taken “at record numbers” from major brands and companies.
“We expect this trend to continue as companies begin to formulate best-use cases for their business in the metaverse,” Johnson said in a statement. “This is an innovative way for companies to reach a new customer base or target demographic that they may not have been exposed to with their existing, more conventional forms of e-commerce or digital advertising.”
But it begs the question: Are virtual shopping malls faring better than their in-person counterparts?
Grocery stores, salons and fast-casual restaurants, essentials to humans outside the virtual realm, are propping up the market for strip malls while Class B and C malls have failed to find their cash crop for success, JPMorgan Chase’s Al Brooks wrote in Commercial Observer last week. And adaptive reuses as warehouses and fulfillment centers are the likely future of these types of malls.
While Class A malls have tended to fare better than their Class B and C counterparts, they’ve still struggled with retailers filing for bankruptcy at a rapid clip, not to mention a global pandemic, that has dropped the values of malls across the country.
But some entities such as Simon Property Group, an Indianapolis-based mall REIT, reported that in 2021 it had managed to generate nearly $4.5 billion in funds from operation of malls and continued the momentum in the first quarter of 2022, CO reported. However, Simon took out several loans over the past two years and gave some mall properties back to lenders.
The trouble over brick-and-mortar retail hasn’t scared off some from its digital version. JPMorgan opened a location earlier this year at Metajuku in Decentraland and believes the metaverse will become a $1 trillion market, according to Fortune. And Everyrealm has invested in 100 real estate projects across 25 platforms in the metaverse, and believes Avison Young will deliver on finding tenants.
“Avison Young is one of the few traditional commercial brokerage firms that understands metaverse real estate, and so it was a natural decision for us to work with them in leasing out the retail stores in our mall in Decentraland,” Janine Yorio, CEO of Everyrealm, said in a statement.
With COVID-19 pushing the real estate industry to adapt,many have turned to the metaverse — such as Jamestown hosting the New Years ball drop at 1 Times Square in the metaverse and announcing last month that it would spend $500 million redeveloping the 118-year-old building in the physical realm to make it more like the clone in Decentraland.
Mark Hallum can be reached at email@example.com.