The Decline and Fall of the Regional Mall

Who has not spent time in a mall; as a kid growing up, during the Holiday season with all the wonderful décor, when the glamorous new store opens with all the fanfare? Enjoy it while you can, because it is quickly changing.

The first American Regional Mall as we know it, with a couple of anchor department stores (at least), two stories of shops (at least) and a food court, was completed in October of 1956, in suburban Minneapolis. It is called Southdale. Even the first one had a compass point name.

What made the mall concept work was multi-fold. Freeway access. Large, available real estate. Retailers willing to add store count by generally copying other examples of their stores creating a “chain” of similar stores. And of course willing consumers.

With the U.S. highway expansion from the 50s-70s, these malls were where America shopped. If you live in a snow climate and can spend Saturday indoors, shopping, hanging out, enjoying the fresh architecture, maybe a performance indoors, see Santa and all the decorations at Christmas, who would not prefer that over the “downtown” experience; especially since you have moved to the suburbs to get away from the downtown. It was as though the retailers were coming to meet you.

Ironically, in many areas of the U.S., the mall was generally there first. At that point, housing developers had the attractiveness they needed to be able to sell (populate) a few thousand homes by offering all the conveniences of wherever you were in the city, out in the suburbs.

That was then. The United States has not built one of these types of suburban enclosed malls since 2006. Numbers vary by the various definitions, but somewhere between 1200 to 2000 total malls of this type existed in the prime through the 1990s.

However, the shopper has changed. In my opinion, the decline of the mall was driven by the same homogeneity that has caused many declines in the last 20 years. Creating scale, that is, to simply expand on something that is working and replicate it most certainly builds volume. But, the long term sustainability is missing – diversity. A variety of consumers with a variety of economic abilities and a variety of wants and needs.

As wonderful as these malls are or were, the re-purposing of their reason to exist tells the story. One third of these malls have vacancy rates at 25% or higher. At least 100 have been completely torn down. Many have added doctor’s offices, gyms, and other space intensive services to back-fill the exodus of retailers capable of paying the increasingly expensive rents.

In Denver, 8 of the 13 regional malls are slated for redevelopment of some sort or other. One of these in Lakewood was converted from the typical 100 acres of centralized building and asphalt parking lot into…………..wait for it…………22 city style blocks of mixed use housing and retail. It kind of sounds like a downtown, doesn’t it!! In fact, the city of Voorhees, NJ, tore down half of a mall and put their City Hall in the remainder.

Now coming to the mall near you….. City Hall!!

Most people have long forgotten or never heard of Dayton, Hudson, Emporium, Bullock’s, May Company, Abraham and Strauss, J.W. Robinson, Hecht’s, John Wanamaker’s, Marshall-Fields, The Bon Marche, Burdine’s (mostly all acquired by Macy’s) which now live on in downtowns by the names etched in stone on still standing city landmark buildings across America. The malls, however, may or may not survive. The mall was not testimony to an entrepreneur’s merchant-ability earned over the long haul through great service to the local population. The malls will instead be destroyed or transformed as the testimony to pure transactional commerce they turned out to be. To quote a mall executive, “We’re Not Overbuilt, We’re Under-Demolished”. Maybe they can all become new “lifestyle centers” like Lakewood. One can only hope. For pictures of Abandoned Malls, go to www.DeadMalls.com.