The Death of the American Mall and the Rebirth of Public Space

All across suburban America, hundreds of shopping malls have become vacant and indebted hulks. Demographics and economics, from the decline of the city fringe to the rise of online shopping, has finished them off. The website documents and memorializes more than 400 derelict American malls. More are set to join the list.

A recent article in the Financial Times suggests that 15% of America’s regional malls will fail in the next five years. “The mall’s 50-year reign as the ultimate shopping destination appears to be coming to an end,” claims a report by the CoStar Group, a real estate analysis firm.

Many are failing despite significant state subsidies. A local government report found that in the St Louis metro area alone, $4.6 billion has been spent in the last 20 years subsidizing chain stores and malls, which are seen as flagships of regional development. Despite that investment, jobs growth and taxable sales have remained flat in St Louis, and two-thirds of its local governments are in fiscal stress. What is now in question, then, is not only the future of the mall, but the future of the mall as a development paradigm.

Urban planners, academics and real estate analysts are starting to think about what comes next: about the future structure of regional towns and suburbs – and the future of public space – after the malls have gone.

Greyfields and ghostboxes

The mall’s troubles started even before the financial crisis erupted. In the mid-1990s, the era of Mallrats, malls were still being constructed at a rate of 140 a year. But in 2001, a PricewaterhouseCoopers study found that underperforming and vacant malls, known as “greyfield” and “dead mall” estates, and “ghostboxes” — derelict big-box retail — were an emerging problem.

In 2007, a year before the crash, no new malls were built in America, for the first time in 50 years. A mall in Salt Lake City which opened in March 2012 was the first to be built since then. New Jersey’s ambitious $4 billion Xanadu mall and indoor ski slope – now re-financed and re-named the American Dream Meadowlands – still languishes, half-built. According to the New York Times, the American Dream, which was conceived before the crash, has struggled despite receiving upwards of $1 billion in the form of tax write-offs, free land and a highway connection from the state of New Jersey.

Evidence suggests that the decline of the American mall, a classic late-twentieth century space, has something to do with the rise of twenty-first century virtual space. Online shopping in America grew 14% last year, while overall retail sales were up only 3%, according to digital business analysts ComScore and the National Retail Federation. 129 million virtual shoppers stampeded the online sales on Cyber Monday last November, spending a record $1.46 billion. Tim Worstall, a Fellow at the Adam Smith Institute in London, argues that the success of online retail portends doom for the shopping mall. “As more shopping moves online we simply need less physical retail space,” Worstall writes in Forbes.

And America has plenty of physical retail space to spare: about twenty square feet per person, according to figures compiled by Shopping Centers Today.

Twentieth-century remnants

The spaces most at risk are remnant malls of the 1960s, 70s and 80s. PricewaterhouseCoopers found that “a typical Greyfield mall is 32 years old with the last major expansion or renovation approximately 13 years ago.”

These older malls emerged during an artificial boom, argues urban historian Thomas Hanchett in theAmerican Historical Review. Mall construction was stimulated by the accelerated depreciation laws of 1954, Hanchett writes, which incentivized greenfield development on the urban fringe. A second stimulus came from legislation passed in 1960, which allowed investors to band together in REITs (Real Estate Investment Trusts) to avoid corporate income taxes. Malls, motels, and fast food restaurants were seeded down the highways and across the landscape by investment trusts at an unsustainable rate.

Now the ten massive REITs that own most of America’s malls are unwilling to invest the capital to reinvigorate older properties. Bloomberg reports that the biggest REITs – including General Growth Properties, which declared bankruptcy during the financial crisis – are recovering and growing by divesting themselves of old, less prosperous malls and concentrating on the most profitable.

The strategy is working – the share price of mall REITs grew 26% on average last year. But it leaves many malls on the financial precipice. “There are some tired malls out there that shouldn’t exist and won’t exist in a few years,” Ryan Severino, a senior economist at Reis Inc., told Bloomberg.

And the strategy may not succeed in the long-term. In the last three months, Barron’s and Seeking Alphaadvised investors to sell mall REIT stocks, which they assessed as being significantly overvalued.

Malls and public space

Some are skeptical that malls will disappear altogether. For journalist Jennifer Popovec at Wealth Management, the ability of mall REITs to turn a profit in difficult economic times is proof that the sector is healthy. “Regional malls aren’t dead – the Internet didn’t kill them,” Popovec writes.

The financial journalist Christopher Matthews, in an article for Time entitled “Reports of the Shopping Mall’s Death Have Been Greatly Exaggerated”, argues that malls will persevere because of their social utility. “America is and has always been a commercial culture, for better or for worse. Shopping is a cultural activity for us. It’s how we come together, interact and socialize.” The mall has provided “the only communal space that many Americans had access to.”

For David Levinson, Director of the Networks, Economics, and Urban Systems Research Group, malls are a fair approximation of functional public space. “What do most urbanists want? A lively, pedestrian realm, clean, free of automobiles, with a variety of activities, the ability to interact with others and randomly encounter friends and acquaintances. This is what the shopping mall gives.”

The Steamtown Mall opened in Scranton in 1993, promising just such a tranquil, reliable, and regulated zone of privatized public space. It offered “year-round climate control (55 degrees), piped-in music, colorful murals and full-time security – including guards on mountain bikes,” wrote the local newspaper, The Morning Call. “On cold days, shoppers can go from their cars up into the mall without wearing coats.”

But Steamtown is now struggling, with ongoing loan deferments, the departure of its General Manager, and vacancy rates calculated at 22% by The Times Tribune. Valued at $25 million, Steamtown has $60 million in debts, including a federal loan administered by the City, the newspaper says. The Scranton mall was a “problematic urban revitalization policy,” writes the local sociology academic Meghan Ashlin Rich in the Journal of Urban Affairs. It hasn’t fostered economic growth, and it doesn’t provide basic amenities like grocery and hardware stores. The city’s generous subsidies would have been better invested in Scranton’s walkable streetscapes and green spaces, Rich writes.

Yet Steamtown is reasserting its relevance as public space and public utility. With free or discounted leases, it has plugged vacancies with outlets of the county library and tax office. The nonprofit children’s education organization Timmy’s Town Center has set up on the second floor, with a puppet theater and miniature farmers’ market. A shuttered nail salon has become an exhibition space for the Steamtown Artist’s Renaissance cooperative.

Local malls also continue to be “gathering places for community events”, Judy Trias from the Pennsylvania Real Estate Investment Trust told the Times Tribune. Steamtown offers live music, karaoke, and magic shows throughout the week. It regularly hosts meet-and-greet events with celebrities, from Justin Bieber to Marvel Comics heroes to stars from the locally-set comedy The Office. On New Year’s Eve last year, there was a horse-drawn carriage and Italian serenades.

But malls and their festivities do not represent real community solidarity, says the University of Sydney academic Meaghan Morris. They are managed spectacles: staged versions of community spirit.

Mall managers work towards “organizing and unifying – at the level of administrative control, if not of achieved aesthetic effect – as much of this spectacle as possible by regulating tenant mix, signing and advertising styles, common space decor, festivities, and so on,” Morris writes in Things to Do with Shopping Centres.

The spectacle, at least, is still alive at Steamtown, as local journalist David Falchek described it for the Times Tribune: “A sunny Friday brought activity to the mall as people sought warm-weather clothing and walked past some of the vacant spaces dressed up with pictures of Scranton. Sun poured through the skylight, creating an ideal setting for pictures with the Easter bunny in the center court. Teens talked about coming back to the F.Y.E. media store at midnight for the release of the latest Twilight movie on DVD, and the mall remained open for the occasion. Mall signs promoted a visit by children’s show star, Bob the Builder, in May.”

After the mall

Architect and critic Mark Hinshaw argues that the mall’s “terminal decline” corresponds with the fate of America’s exurbs, in which large-scale malls are chiefly located. Writing for Crosscut, Hinshaw points to census data showing extremely low growth in the outskirts of cities. In 2011, cities and dense inner suburbs grew faster than emerging suburbs and exurbs, after decades of flight to the fringe. William Frey, a demographer with The Brookings Institute, believes the trend may be the “new normal:” “The fact that outer suburban growth has continued to falter two years after the recession ended calls into question whether today’s younger generations will hold the same residential preferences as their forebears,” Frey writes in an analysis for The Brookings Institute.

For Georgia Tech academic Ellen Dunham-Jones, an exponent of “New Urbanism,” the decline of the mall points to a rebirth of the urban. “Yesterday’s less sustainable suburban development types – the malls, office parks, and commercial strips – are increasingly being retrofitted into more sustainable, more urban places with buildings and spaces that foster communal support, diversity, and reduced vehicle-miles-travelled,” Dunham-Jones writes in Economic Sustainability in the Post-Industrial Landscape.

In Lakewood, Colorado, the 1960s Villa Italia Mall was demolished in 2001 and replaced by a 22-block downtown development. 1300 apartments and upscale townhouses cluster around a dense urban core comprising a plaza, shops and restaurants. The poet and urban design academic Simmons Buntin praised the development for its “appropriately-scaled urban feel” and its ability to seem both “new and well-established”.

Other examples are less hopeful. The early-60s Cottonwood Mall in Holladay, Utah’s first indoor shopping mall, was slated to be replaced by a $550 million mixed-use, medium-density neighborhood. Yet for five years the leveled site has remained empty, sprouting nothing but weeds and flowers. The development was led by the mall REIT General Growth Properties. The REIT built bridges on the site, rerouted a creek, and accepted $96 million in tax incentives, according to the Salt Lake Tribune. But work was halted in April 2009 with the financial crisis biting and bankruptcy pending. The site is now owned by the Howard Hughes Corporation. A spokesperson from Hughes told the Salt Lake Tribunethat the company was “positive” about the development, “but there is not a concrete timetable yet.”

The link between this New Urbanist development and a mall REIT is significant. It points to a danger raised by city planner Ann Satterthwaite: that post-mall neighborhoods will simply become outdoor malls, as controlled and sterile – and state subsidized – as indoor shopping centers. The return of Main Street is an undeniable trend, Satterthwaite writes in The Encyclopedia of Community. “But the mall Main Street is more a privately controlled theme park than a public street with its diverse people and activities and freedoms.” If Satterthwaite is right, we haven’t yet found a way to live beyond the mall.

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