Orange County, which has long positioned itself as an international shopping mecca, finds itself scrambling to cope with a dramatic upheaval in consumer spending habits.

“Retail is not dead or dying,” economist Wallace Walrod told the Orange County Business Council’s 2017 Economic Development forum last week. “But it is changing rapidly and dynamically before our eyes. Orange County has to adjust.”

The newly remodeled Ruby’s Diner is part of the renovation project at Five Lagunas Mall, formerly Laguna Hills Mall, in Laguna Hills on Wednesday, July 19, 2017. The renovation will include luxury apartments, a movie theater, a park and indoor and outdoor shops. (Photo by Leonard Ortiz, Orange County Register/SCNG)

The health-oriented Camp center is part of Costa Mesa’s SoBECA district. The Camp, across the street form the Lab Antimal, is a green gathering specializing in personal wellness and healthy dining. (Photo by Ana Venegas, Orange County Register/SCNG)

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A gathering area at the LAB Antimall features a homey and youthful hangout feel. The LAB, which stands for Little American Business, is across the street from The Camp, a green gathering specializing in personal wellness and healthy dining. (Photo by Ana Venegas, Orange County Register/SCNG)

Construction workers guide a truck at the expansion and renovation project at Five Lagunas Mall, formerly Laguna Hills Mall, in Laguna Hills on Wednesday, July 19, 2017. The renovation will include luxury apartments, a movie theater, a park and indoor and outdoor shops. (Photo by Leonard Ortiz, Orange County Register/SCNG)

Steel beams to be used for the new movie theater as part of the the expansion and renovation project at Five Lagunas Mall, formerly Laguna Hills Mall, are piled up in the parking lot until ready to use in Laguna Hills on Wednesday, July 19, 2017. The renovation will include luxury apartments, a movie theater, a park and indoor and outdoor shops. (Photo by Leonard Ortiz, Orange County Register/SCNG)



Construction workers work on the expansion and renovation project at Five Lagunas Mall, formerly Laguna Hills Mall, in Laguna Hills on Wednesday, July 19, 2017. The renovation will include luxury apartments, a movie theater, a park and indoor and outdoor shops. (Photo by Leonard Ortiz, Orange County Register/SCNG)

The LAB Antimall a homey and youthful hangout feel. The LAB, which stands for Little American Business, is across the street from The Camp on Bristol Street in Santa Ana. (Photo by Ana Venegas, Orange County Register/SCNG)

Chico Hats at Pacific City mall features a wide variety of styles from fedora to floppy. Customer Kyla Allard of Lakewood says she likes the mall’s unique stores. (Photo by Mindy Schauer, Orange County Register/SCNG)

A customer of Alfred Angelo in Brea, CA reads notices posted on the door of the closed shop on Friday morning, July 14, 2017. Alfred Angelo bridal shop files for bankruptcy leaving brides and maids with just a number to call. (Photo by Ken Steinhart, Orange County Register/SCNG)

The Residences at Pacific City, behind the recently opened shopping and entertainment area, will have expansive views of the ocean, Huntington Pier and Catalina Island



A couple walks by directional mosaic at the renovated Bella Terra Mall in Huntington Beach. (File Photo, Orange County Register/SCNG)

A window display is seen at Alfredo Angelo bridal store in West Covina, Calif., Friday, July 14, 2017. The wedding dress retailer declared bankruptcy late Thursday, July 13, and suddenly shut down all of its stores, leaving customers without answers about how they’ll get their dresses that are already on order. (Walt Mancini /Los Angeles Daily News via AP)

Customers stand outside a closed Alfredo Angelo bridal store in West Covina, Calif., Friday, July 14, 2017. The wedding dress retailer declared bankruptcy late Thursday, July 13, and suddenly shut down all of its stores, leaving customers without answers about how they’ll get their dresses that are already on order. (Walt Mancini /Los Angeles Daily News via AP)

The LAB Antimall is anchored by Urban Outfitters on Bristol St. in Costa Mesa. (Photo by Ana Venegas, Orange County Register/SCNG)

H&M is a neighbor to the ocean and more one-of-a-kind stores at Pacific City. (Photo by Mindy Schauer, Orange County Register/SCNG)



Visitors take a look at an artist rendering of The Residences at Pacific City in Huntington Beach thursday morning. The apartments are in the process of being built adjacent to Pacific City, a new dining, entertainment and shopping destination on Pacific Coast Highway. (Photo by Mark Rightmire, Orange County Register/SCNG)

Boastful signs decorate Pacific City, where Spencer Pepe and his son Kaiden, 1, spend some time. The new 191,000-square feet mall is named after the original oceanfront village of Huntington Beach. (Photo by Mindy Schauer, Orange County Register/SCNG)

The health-oriented Camp center is part of Costa Mesa’s SoBECA district. The Camp, across the street form the Lab Antimal, is a green gathering specializing in personal wellness and healthy dining. (Photo by Ana Venegas, Orange County Register/SCNG)

The mighty Pacific Ocean beakons shoppers to pause and take in it’s dramatic views from Pacific City mall in Huntington Beach. (Photo by Mindy Schauer, Orange County Register/SCNG)

The health-oriented Camp center is part of Costa Mesa’s SoBECA district. The Camp, across the street form the Lab Antimal, is a green gathering specializing in personal wellness and healthy dining. (Photo by Ana Venegas, Orange County Register/SCNG)



Xaviera Pepe with her son Kaiden, 1, and mom Reyna Vanegas, take a moment out of shopping for a fun picture at the Pacific City mall in Huntington Beach. (Photo by Mindy Schauer, Orange County Register/SCNG)

Thao Hoang and Robert Nguyen of Fountain Valley take a stroll through the new Pacific City mall in Huntington Beach. “This is someplace we can take out family and relax,” Nguyen said after looking out at the expansive ocean from the second floor of the outdoor mall. (Photo by Mindy Schauer, Orange County Register/SCNG)

As he reeled off statistics to an audience of about 100 business executives and city officials at the Irvine Valley Performing Arts Center, Walrod projected a slide of a newly-created Wikipedia page titled “Retail Apocalypse.”

Among his data points:

–In June, Orange County retail jobs had dropped year-over-year by nearly one percent, even as the county’s population has grown. By contrast, retail employment in the Inland Empire, where Amazon is building its fifth warehouse, rose by 0.7 percent.

–Nationally, 5,368 stores have closed this year, up 162 percent year over year, according to Fung Global Retail & Technology, a leading research group. It forecasts a jump of 361 percent by year’s end.

–Last year, 108.5 million Americans shopped online during Black Friday weekend compared with 99.1 million who shopped in stores. It was the first time more Americans shopped online.

The shifting landscape is spreading fear among city officials as to how they will pay for public services in a future of dwindling local sales taxes.

“When you think about the base economic structure of a city and what taxable sales do for local and regional services, there’s a significant impact,” said Darin Chidsey, chief operating officer of the Southern California Association of Governments and a panelist at the forum. “How do we switch the local government business model?”

Credit Suisse, the financial services firm, predicts 25 percent of U.S. malls operating today could close by 2022.

In Orange County, vacancy rates rose slightly in the first quarter of this year, to 4.3 percent, Walrod said. The U.S. mall vacancy rate was 9.9 percent in the first quarter.

Orange County’s rate may currently be healthier than the nation’s, he added, but a growing exodus of millennials from Orange County, due to its high housing costs, has “broad implications” for retailers.

Nationally, millennials, the population born since about 1982, are expected to account for $1.4 trillion in annual spending, 30 percent of the retail market by 2020.

Their habits are forcing commercial real estate companies in Orange County and across the nation to radically change how they design shopping centers.

“The traditional way of doing streets and streets of retail — those days are gone,” said another panelist, Easther Liu, chief marketing officer for Irvine Company Retail Properties. “We had to think differently about the type of retail that’s going to excite customers. How do we get someone out of the house? Because most of us can do shopping at home, even at two in the morning.”

Irvine Co. is spending $150 million to renovate the Irvine Spectrum Center, replacing a defunct Macy’s Department store with 20 new stores, fresh landscaping and outdoor seating.

Like other branding-focused developers, it prefers to call its malls “entertainment and lifestyle destinations,” emphasizing, in the case of the Spectrum, its restaurants, Improv Comedy Club and IMAX Theater.

“We’re catching up to a massive cultural shift,” said Shaheen Sadeghi, whose Costa Mesa company, LAB Holding, was a pioneer in creating what he has called “anti-malls,” centers that avoid chain stores in favor of small, local retailers.

Americans, he said, “represent 4 percent of the global population but we consume 25 percent of goods and services.” Today, he added, “we’ve reached a point where consumption is not our most productive and emotional past time. We are more interested in social experiences.”

That’s why, according to Sadeghi, farmers markets are proliferating — places where people can talk to growers “about gorgeous tomatoes grown within a 10-mile radius rather than brought in from South America and wrapped in toxic material.”

At a Mission Viejo shopping center, he said he recently observed a young woman spend just $7.99 on a pair of jeans but a few minutes later splurge on a $6.50 cup of “designer coffee” she could sit down and drink with her boyfriend.

Shopping for goods, whether for clothes or toilet paper, will increasingly move online. And by 2030, apparel sales are expected to account for 35 percent of e-commerce, up from 17 percent today, Walrod said.

That explains the strategy of the aging Laguna Hills Mall, where the vacancy rate hit 34 percent before it moved to reinvent itself as “Five Lagunas,” a self-described “walkable village.” Scheduled to re-open next year, it will feature a 1-acre park with a giant outdoor screen, where visitors can attend live music shows and watch sporting events.

Restaurants, a fitness center and a 988-unit apartment complex will broaden a complex that was once purely focused on retail.

Responding to Orange County’s severe housing shortage, more retail centers are incorporating apartments, including Huntington Beach’s Bella Terra, and a new complex, Pacific City where a 516-unit luxury apartment development is being built alongside the outdoor, ocean-front mall.

Meanwhile, as malls replace brick-and-mortar stores with sit-down eateries, gyms and entertainment venues, cities have yet to figure out how to replace sales tax revenues.

Curt Pringle, a former Anaheim mayor who moderated a panel of public officials at the forum, raised the issue of whether cities should tax not just goods, but also services, asking, for instance, whether massages and pedicures at South Coast Plaza should be taxed.

Katrina Foley, mayor of Costa Mesa, disagreed with taxing services but suggested that marijuana sales, in the wake of California’s recent legalization of recreational pot, could be “a huge tax generating force for the state and cities.”

Diane Harkey, chairwoman of the state Board of Equalization, said changes could be made in how cities and the state divide sales tax revenue. But she added, “Property tax is going to be more on the menu,” a possible reference to the debate over whether commercial real estate should pay more property tax.

Instead of raising sales taxes, Bruce Channing, city manager of Laguna Hills, suggested that municipalities rethink corporate rebates. “Close to 20 percent of sales taxes are rebated to corporate interests to entice them to relocate,” he said.