As retail stores fade, private clubs take over mall real estate

In today’s K-shaped economy, low-income shoppers who go shopping may be turning to Dollar General or post-bankruptcy Big Lots, but affluent Americans are increasingly turning to the mall private club. Membership clubs are increasingly viewed as retail revitalizers, whether in a traditional shopping center, an open-air mall, or as a freestanding commercial real estate tenant.

Like their country club cousins, private clubs charge monthly dues and often an initiation fee. For example, Dallas’ Highland Park Village, home to stores like Hermès, Fendi, and Brunello Cucinelli, is also home to Park House, a private club offering fine dining, a wine bar, and art experiences. Established memberships are available for a $7,000 initiation fee and annual dues of $292 per month (a spouse can join for $4,000). Moore House in Miami’s open-air Design District has an initiation fee of $5,000 and monthly dues of over $400. In addition to food and product curation, it also offers overnight accommodations if needed.

Because they’re so new, data is scarce, but RJ Hottovy, Placer.ai’s head of analytics research, says these clubs are growing in popularity as part of existing shopping destinations and follow other trends in retail, such as gyms, co-working spaces and malls that are increasingly populated with retail clubs where dues replace discounts. Both street-level retail stores and shopping malls are finding that memberships increase business and drive traffic to retail centers like Highland Park Village.

“We’ve seen an increase in these. They appeal to high-end consumers. The idea is another place, a status symbol. It’s exclusivity,” Hottovy said. He added that Placer.ai’s research shows that in the post-Covid era, more diners are turning to country clubs and fewer are turning to restaurants. Private clubs offer a similar “safe space” for people to gather.

Clubs once restricted to coastal elites are increasingly making their way to fly-in country. Social House, a club with a starting fee and monthly dues of $4,000, recently opened adjacent to The Banks, a busy outdoor retail area in Cincinnati. A vacant building in downtown Grand Rapids, Michigan, will be transformed into The Commerce Club, a private club with a café, event space, co-working spaces and conversational space. Scheduled to open in November 2026, co-founder Jeff Lambert says the building will help revitalize an area near downtown. “The goal is to take a building that has been vacant for over a decade and turn it into a hub of activity,” Lambert said of the 55,000-square-foot space.

Lambert, a local developer, says he is inspired by similar private clubs abroad or in larger U.S. cities, and that midsize cities in the U.S. are seeing the biggest growth in the private club market. Even five years ago, he says, Grand Rapids might have struggled to support a private club, but the entrepreneurial class in the city has reached critical mass. “We deserve and can support something like this that you can experience in Madrid, Los Angeles and New York. We can create an experience that feels subway but is very local,” Lambert said.

Developers have strong incentives to embrace membership-based businesses, whether in a mall or elsewhere, according to Wake Forest University marketing professor Jia Li. “Many shopping malls face challenges in filling vacant anchor spaces or underutilized upper floors. A private club can absorb a large footprint while generating stable, repeat traffic,” Li said.

For high-end malls, private clubs are particularly attractive because they allow owners to fill and, in many cases, enhance significant space without diluting the brand. “A well-curated, members-only club can reinforce a shopping mall’s positioning as an exclusive lifestyle destination rather than a purely transactional retail hub,” Li said. In some ways, this makes shopping malls fully achieve their original social purpose. “Although we mostly associate malls with shopping today, the first malls in suburban post-war America were clearly envisioned as ‘community and civic centers,’ not just retail vending machines,” Li said.

The private club concept is decades old but gaining new traction, says Daniel Spiegel, senior vice president and general manager of Coldwell Banker Commercial. “Private social and dining clubs were very popular from the 1950s through the 1990s, and we may be seeing a comeback in different forms,” ​​Spiegel said. In some cases, fitness clubs, co-working concepts and social spaces that have recently been common in office properties are now found in retail centers as well. Some of the areas Coldwell Banker represents are very typical shopping malls like Scottsdale, Arizona’s Fashion Square, where clubs like Industrious serve as co-working and social spaces.

“These membership-based operators offer landlords attractive features such as long-term leases, consistent foot traffic during off-peak hours, and members with discretionary income that benefits surrounding tenants,” Spiegel said. he said. Construction costs can be significant and the economy must operate in markets with sufficient density and demographics. “But this reflects a broader shift where successful retail properties are becoming destinations that offer experiences beyond traditional shopping,” he added.

Why do both homeowners and consumers go to nightclubs?

In recent years, retail landlords have pursued many options for vacant square footage and increasing foot traffic, from conversions to housing to a greater focus on experiences and even megachurches as tenants.

Sam Vise, CEO and co-founder of Optimum Retailing and also a member of New York City-based private club Soho House, says clubs are becoming more attractive to developers looking to increase traffic to their properties because a typical mall anchor store might bring customers a few times a week, while a private club might bring customers to the same property multiple times a week. “As malls and retail centers rethink their role post-e-commerce, these clubs introduce an established, high-frequency customer who values ​​experience, community and time spent on site – all things traditional retail has struggled to deliver on its own,” Vise said. he said.

In addition to landlords seeking tenants who generate repeat visits, this trend is also driven by young consumers who prioritize social connection over pure consumption and transactional foot traffic. “It creates a reason to return weekly, sometimes daily, and that expansion has benefits surrounding food, wellness and retail concepts,” Vise said. He added that the clubbing trend is already opening doors for digitally native brands and emerging concepts to test physical retail in highly interactive environments through sensational pop-ups.

“When implemented well, private social clubs act as a catalyst, raising the bar for how surrounding retail engages customers and encourages repeat visits,” Vise said. The downside is that these clubs do not automatically translate into wider availability. “Nearby retailers need to be intentional about how they engage by aligning assortment, service and in-store experience with a customer who expects refinement and hospitality, not just convenience,” Vise added.

Clubs are prone to their own boom and bust cycles. Some of the best-known club brands, including Soho House, have seen mixed results from recent expansion initiatives. Since its initial public offering in 2021, Soho House has continued with plans to open more locations, including across the United States. It is now being taken private at a valuation similar to its four-year IPO price.

Private clubs bring something else to retail centers besides the coveted cachet: length of stay. “The more time a person stays at a property, the more money they spend,” said Charlie Koniver, principal at Odyssey Retail Advisors, a New York City-based real estate consultant that works with upscale and contemporary retailers to create luxury shopping centers.

A members-only club can act as a commercial real estate agent, but Koniver says clubs aren’t a good fit for every mall or retail center. A private club isn’t necessarily a good candidate for an empty Sears box, and they often make for more attractive, independent retail outlets. Clubs tend to have smaller footprints and when they are in shopping malls or retail villages, they are viewed as upscale anchor tenants. “When they become part of the retail landscape, they tend to be ones that don’t have traditional anchors,” Koniver said.

According to Greg Zakowicz, e-commerce and retail consultant at Omnisend, the private club phenomenon is an extension of a consumer need that has been around since the beginning. “Let’s not forget that high-end shoppers are often members of other exclusive clubs, such as golf and swim clubs and even airport lounges. Now brands are taking this model and applying it to retail, offering curated products and experiences in a high-end, exclusive environment,” Zakowicz said. he said.

In the current economic environment, where upper-income households continue to spend, capturing these customers has become even more important even as middle- and lower-income households reduce their discretionary spending, Zakowicz said. But he doesn’t believe this is critical in the retail space. “Styles and preferences change with retail, and concepts like this will certainly evolve with them. But that’s fine. I don’t think retailers need these to be sustainable in the long term to survive,” he added.

This phenomenon is likely a byproduct of the K-shaped economy, where many Americans own stock portfolios and can afford luxuries in professional lines of business, says David Loranger, an assistant professor of fashion marketing and merchandising at Sacred Heart University. But he suggests there may also be some political persuasion in the private club trend. There’s the MAGA-friendly Executive Branch, which opened last year on the lower level of the Georgetown Mall outside Washington, D.C. Club, Donald Trump Jr. It was co-founded by and is open by invitation only. “This could also be a sort of Mar-a-Lago halo effect where people who see themselves (or aspire to be) in the league of Trump, Bezos, and other CEO types become interested in belonging to such a club,” Loranger said.