Ads are being blocked

For us to continue writing great stories, we need to display ads.

Un-block Learn more


Please select the extension that is blocking ads.

Ad Block Plus Ghostery uBlock Other Blockers

Please follow the steps below

Shopping Malls Aren't Actually Dying

Photos of creepy, abandoned malls are eerie, but misleading. Most of America's malls are doing just fine.

Shoppers ride escalators at the Beverly Center mall in Los Angeles, California. (REUTERS/David McNew )

On March 5, the Miami Herald revealed a new plan to build a 200-acre mega-mall in the suburbs of Miami, complete with an attached hotel and condos, a sea-lion show, and an artificial ski slope. It would be the largest shopping mall in the United States, surpassing Minnesota's Mall of America (developed by the same Canadian company, Triple Five).

On Twitter, the response from urbanists was swift—and incredulous:

Now, there are certainly reasons to be skeptical of this particular plan. American Dream Miami, as it's tentatively known, will cost an inordinate amount of money to build—up to $4 billion—and add to local traffic woes, especially given that the site, near Miami Lakes and Hialeah, isn't served by public transit. Another Triple Five extravaganza-in-progress, in Meadowlands, New Jersey, has repeatedly run aground and needed a state bailout in 2011. (Triple Five didn't initiate that project, however.)

Does it beggar belief that a mall could have a lake with submarines and a ski slope where artificial snow falls 24 hours a day? Sure. But if you're amazed that anyone would bet on the success of a big, flashy suburban mall in the year 2015, you shouldn't be. Contrary to popular opinion, the American shopping mall is not dead. It's very much alive.

We've all read about dead malls and ogled the pictures of them: stopped escalators, crumbling ceilings, and storefronts with the ghosts of old Sears and Foot Locker signs. According to a much-cited analysis by the CoStar Group, almost 20 percent of the country's enclosed shopping malls have vacancies of 10 percent or higher. At 3.4 percent of American malls, vacancy has reached at least 40 percent, putting them in the "dying" category.

The dead or dying mall is a real phenomenon. But all you have to do is invert these figures to get the bigger picture, which looks very different. If 20 percent of malls are in trouble, then 80 percent are still healthy. If 3.4 percent of malls are dying, then 96.6 percent of them aren't. (When the New York Times ran an otherwise nuanced front-page story on struggling malls in January, the accompanying graphic had a top line of 20 percent, wrongly suggesting that a rash of dead malls was a pandemic.)

Yes, a number of malls have closed since the beginning of the recession, but there are some 1,200 shopping malls across the United States. In fact, things are looking up for mall operators. Turning to CoStar's research again, the average mall vacancy rate at the end of 2014 was 5.5 percent, far below the threshold of ill health.

Most malls are owned by a handful of publicly traded real-estate investment trusts (REITs), and the big players who specialize in higher-end malls are doing well. The top three—Simon Property Group, General Growth Properties, and Macerich—have seen their stock prices rise since 2012.

In a recent report, the real-estate research and advisory firm Green Street Advisors predicted that Class A malls—the "destination" malls in major markets—"should perform at a high level for years to come," while Class B malls will remain stable, because they "adequately serve their target shopper in a given trade area." It's the Class C and D malls whose future is dicey, and more of these will indeed likely go dark. There are about 200 malls in this category.

When malls do perish, what's often killing them is demographics. Population decline plus the the ongoing slump in middle-class wages spell trouble in some regions. "Middle America, it's tough," says Andrew Graiser, whose firm A&G Realty Partners advises companies such as Aldo and Panda Express on their real-estate decisions. "I think it's going to be tough for a while."   

Malls occasionally die in more populous and affluent places, too. There, the culprit may be competition—not from Amazon or downtown stores, but from another, spiffier mall down the road. In his recent essay "The Twilight of the Indoor Mall," writer Mike Nagel recalled asking a longtime worker at a dying mall in Dallas where all the customers had gone. "'Better malls,' she said."

City Creek Center mall in Salt Lake City, Utah, is an indoor/outdoor hybrid shopping center. (City Creek Center)

The International Council of Shopping Centers (ICSC), a retail trade association, is worried enough about the dead-malls narrative that it has hired a PR firm to counter it. Spokesperson Jesse Tron told me that mall occupancy is the highest it's been since 1987. Rental rates are on the rise. Net operating income across all shopping centers "advanced solidly as well in 2014," Tron says, and has grown at a faster clip than at any time since 2000.

Tron contends that the threat of e-commerce is exaggerated, too. According to ICSC, online shopping still represents only 7 percent of retail sales. Graiser agrees that the growth in online commerce may be "stabilizing." Even so, "a lot of retailers are looking to go smaller" in their physical stores, he says, or are shifting to short-term leases as the industry experiments with "omni-channel" retailing—the practice of serving customers via the web and apps as well as at bricks-and-mortar locations.

Meanwhile, malls are working hard to drum up more foot traffic. Increasingly, higher-end shopping malls peddle an experience, not just goods. They have real restaurants and cafés instead of wan food-court fare, ritzy salons, and maybe a Whole Foods where a department store used to be.

"Consumers' time is a big factor now," explains Catharine Dickey, a spokesperson for Westfield, the nation's fourth-largest mall operator. "For centers to try to meet those needs all in one place, [they] introduce perhaps unconventional retailers or elements into the mix. Food. Entertainment. Leisure … in addition to the traditional fashion, which is not going away."

A couple of weekends ago, I decided to be a mall fly at one of Westfield's flagship properties, Westfield Montgomery, located several miles from Washington, D.C., in the affluent suburb of Bethesda, Maryland. It was definitely not dead. It was also really, really nice. In a $90 million renovation completed last year, Westfield replaced the mall's old food court with a swanky "dining terrace" that serves sushi and artisanal pizza, and added an upscale movie theater from the ArcLight chain.

That the American mall has now split into two distinct species—a thriving upscale one and an ailing low-end one—is yet another sign of stark income inequality, as commenters before me have pointed out. While I worry a lot about income inequality, I'm less troubled by the existence of luxury malls. They might cater to the 1 percent, but they can't survive unless they have broader appeal. On my trip to Westfield Montgomery, I learned that a middle-class mallgoer can get a kick out of sitting in a Tesla (yes, there's a showroom in the mall) before heading to Old Navy to buy regular-Jane stuff.

What Tron calls "the experience factor" is likely to be the main driver for malls in the years to come. The industry's embrace of outdoor lifestyle centers and indoor/outdoor hybrids (like City Creek Center in Salt Lake City), rather than traditional enclosed malls, reflects shoppers' preference for newer, open-air facilities with a more urban feel to them. But even enclosed malls aren't going extinct. The Mall at University Town Center in Sarasota, Florida, opened last year; according to CoStar, it is 100-percent leased. Westfield is building a new enclosed mall at the World Trade Center in New York.

All of this is why, ski slope and sea lions aside, it is not prima facie crazy to build a mega-mall in greater Miami, a city that some analysts believe is under-retailed, and where tourism is booming. (Class A malls often become tourist destinations, as this one surely will.) Urbanists like to think that the American mall is a relic. But the truth is that until more suburbs redevelop to become denser and walkable, the mall is the best communal—though not really public, alas—space that we've got.

About the Author