Private clubs take over mall real estate as retail declines

In today’s K-shaped economy, lower-income shoppers may go to Dollar General or post-bankruptcy Big Lots, but wealthy Americans are increasingly heading to private clubs in shopping centers. Membership clubs are increasingly being looked at as reinvigorating retail businesses, whether in traditional shopping malls, outdoor shopping centers, or as stand-alone commercial real estate tenants.

Like their country club cousins, private clubs require monthly membership fees and often an initiation fee. For example, Dallas’ Highland Park Village, home to shops like Hermès, Fendi, and Brunello Cucinelli, is also home to Park House, a private club that offers fine dining, wine bars, and art experiences. Resident members can join for a $7,000 initiation fee and annual membership fee of $292 per month (spouses can join for $4,000). Located in Miami’s open-air Design District, Moore House has an entry fee of $5,000 and monthly dues of more than $400. In addition to a selection of meals and products, we also provide overnight accommodations if needed.

Although they are so new that data is lacking, RJ Hottovy, head of analytics and research at Placer.ai, says these clubs are becoming more popular as part of existing shopping destinations and are linked to other trends in the retail industry, such as gyms, co-working spaces, and increasingly crowded malls that feature membership fees instead of discounts. Both street retailers and malls are realizing that membership drives business and traffic to retail centers like Highland Park Village.

“We’ve seen these things on the rise. They appeal to high-end consumers. The idea is that it’s a separate place, a status symbol. It’s exclusivity,” Hottovy said. He added that Placer.ai’s research also shows that country clubs are drawing more customers and restaurants are drawing fewer customers in the post-COVID era. Private clubs provide a similar “safe space” for people to gather.

Clubs once confined to coastal elites are increasingly expanding into elevated areas. Social House, a club with an initiation fee and monthly dues of $4,000, recently opened adjacent to The Banks, Cincinnati’s bustling outdoor retail area. A vacant building in downtown Grand Rapids, Michigan will be transformed into The Commerce Club, a private club with a cafe, event space, co-working area, and secret bar. Scheduled to open in November 2026, co-founder Jeff Lambert said it will help revitalize areas near downtown. “The idea is to take a building that has been vacant for over 10 years and turn it into a hub of activity,” Lambert said of the 55,000-square-foot space.

Lambert, a local developer, is inspired by similar private clubs in large cities overseas and in the United States, and says mid-sized cities across the country are seeing the most growth in the private club market. Even just five years ago, it would have been difficult to support a private club in Grand Rapids, but the city’s entrepreneurial class has reached critical mass, he said. “We deserve something like this to experience in Madrid, Los Angeles and New York, and we can support it. We can create an experience that has a metro feel, but is very local,” Lambert said.

Jia Li, an associate professor of marketing at Wake Forest University, said developers have a strong incentive to embrace membership-based businesses, whether in malls or elsewhere. “Many malls face the challenge of filling vacant anchor spaces and underutilized upper floors. Private clubs can absorb a large footprint while generating steady, regular foot traffic,” Lee said.

Private clubs are particularly attractive to luxury shopping malls because they allow owners to fill large spaces without diluting their brand, and often enhance it. “Selected members-only clubs can strengthen the mall’s position as an upscale lifestyle destination rather than a pure transactional retail center,” Lee said. In a way, this brings the mall full circle to its original social purpose. “Today, we often associate malls primarily with shopping, but the early shopping malls in postwar American suburbs were clearly conceived as ‘community and civic centers,’ not just retail stores,” Lee said.

Daniel Spiegel, senior vice president and managing director at Coldwell Banker Commercial, said the private club concept has been around for decades but is gaining new attention. “Private social and dining clubs were very popular from the 1950s to the 1990s, and they could come back in many forms,” ​​Spiegel said. In some cases, fitness clubs, coworking concepts, and social spaces that were common in office properties these days are now taking up space in retail centers. Some of the spaces represented by Coldwell Banker are located in very typical malls, such as Fashion Plaza in Scottsdale, Arizona, where clubs like Industrious serve as both work and social spaces.

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

Why do landlords and consumers go to clubs?

In recent years, retail landlords have pursued a number of options to use vacant space to increase foot traffic, from converting it into experiential housing to even megachurch tenants.

Sam Vis, CEO and co-founder of Optimum Retailing and member of the New York City-based private club Soho House, says private clubs are becoming increasingly attractive to developers looking to increase foot traffic to their properties because they can bring customers to the same property multiple times a week, whereas a typical mall anchor store brings customers several times a week. “As malls and retail centers rethink their post-e-commerce roles, these clubs are introducing built-in, high-frequency customers who value experience, community, and time spent on-site, all of which traditional retail has struggled to provide on their own,” Vice said.

In addition to landlords looking for tenants that will generate repeat visits, this trend is being driven by younger consumers who prioritize social connections over pure consumption and transaction volume. “It creates a reason to come back every week, sometimes even every day, and that ripple effect leads to benefits surrounding food, wellness and retail concepts,” Vice said. He added that the club trend is already opening the door for digitally native brands and new concepts to test physical retail in high-engagement environments through pop-ups that generate buzz.

“Private social clubs, if executed well, can act as a catalyst, raising the bar for surrounding retail businesses to attract customers and encourage repeat visits,” Mr Bice said. The downside is that these clubs do not automatically lead to widespread accessibility. “Neighborhood retailers need to be intentional about how they engage with customers, aligning their assortment, service and in-store experience to customers who expect not just convenience, but also curation and hospitality,” Bice added.

Clubs tend to have boom and bust cycles. Some of the most famous club brands, including Soho House, have had mixed results in recent expansion attempts. Since its initial public offering in 2021, Soho House has been moving forward with plans to open more locations, including across the U.S., but is now going private at a valuation similar to its five-year IPO price.

Private clubs provide retail centers with something along with much-needed prestige: dwell time. “The longer a person stays in a property, the more money they spend,” says Charlie Coniver, principal at Odyssey Retail Advisors, a New York City-based real estate consultant who works with high-end and contemporary retailers on developing high-end shopping properties.

While members-only clubs can serve as an anchor for commercial real estate, Coniver says clubs aren’t right for every mall or retail center. Private clubs are not necessarily good candidates for Sears empty boxes, and often serve as more attractive stand-alone retail stores. Clubs tend to have smaller retail footprints and are considered upscale anchor tenants if located in malls or retail districts. “When it comes to being part of a retail environment, it tends to be something that doesn’t have a traditional anchor,” Coniver said.

The private club phenomenon is an extension of a long-standing consumer need, said Greg Zakowicz, e-commerce and retail advisor at Omnisend. “Remember, high-end shoppers are often members of other private clubs, such as golf clubs, swim clubs, or even airport lounges. Now, brands are taking that model and applying it to retail by offering curated products and experiences in upscale, private environments,” Zakovits said.

In the current economic environment, attracting these customers has become even more important as higher-income households continue to spend even as middle- and low-income households cut back on discretionary spending, Zakovits said. But he doesn’t think this is important for the retail industry as a whole. “Styles and tastes change in retail, and I’m sure concepts like this will evolve with them. But that’s OK. I don’t think retailers need to be sustainable over the long term to survive,” he added.

David Loranger, assistant professor of fashion marketing and merchandising at Sacred Heart University, said the phenomenon is likely a byproduct of the K-shaped economy, where many Americans own stock portfolios, hold professional jobs and can afford luxury goods. But he suggests there is probably some political persuasion behind the private club movement. A MAGA-friendly executive branch opened last year on the bottom floor of the Georgetown Mall outside Washington, DC. The club was co-founded by Donald Trump Jr. and is invitation-only. “This could be some kind of Mar-a-Lago halo effect where people who think of themselves as (or aspire to be) in the Trump, Bezos, or other CEO-type hierarchy become interested in being part of that club,” Loranger said.