Why U.S. Malls Are Disappearing

Shopping malls in the U.S. were already in decline before the Covid-19 pandemic as consumers shifted away from traditional brick-and-mortar stores to e-commerce. The outbreak has only exacerbated the challenges at malls as social distancing has placed restrictions on stores, movie theaters and restaurants. So what will become of malls in America after the pandemic ends?

Shopping malls across the U.S. have been reeling as restaurant and retail tenants struggle to keep their doors open.

Data compiled by Coresight Research shows about a quarter of U.S. malls could close over the next three to five years, accelerating a trend that began before the pandemic.

Simon Property Group — the nation's biggest mall owner — said earlier this month that its fourth-quarter revenue dropped by 24% on a year-over-year basis to $1.1 billion.

However, some analysts think Simon — with its portfolio of A-rated malls and a healthy balance sheet — will benefit as distressed malls operated by its rivals close their doors. The company is also expected to see gains from new additions like hotels and luxury residences.

"Unfortunately there are a lot of centers that don't fit that high profile and that have lost their competitive edge," said Piper Sandler analyst Alexander Goldfarb. "The thing about Simon is they've been really focused on maintaining it, and that's both been through a combination of culling the lower productive centers as well as making sure that they keep investing in their top centers."

Simon Property Group CEO David Simon said the company is also getting a lift from increasing traffic at some of its locations and from tenants paying their rent on time.

Malls are a big tax driver for the communities they serve and employ lots of people locally. Watch the video above to find out more about the struggles U.S. malls face and what could become of them after the pandemic ends.

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Why U.S. Malls Are Disappearing

[MF-tyzn]

The malls started charging too much money for goods. Middle class salaries and wages stagnated. People turned to Wal-Mart, Target, and Amazon for better prices.

[DavidCesarVera]

I feel lucky to have experienced mall culture at its height as a kid

[markportzer]

Here in the U.S. I noticed that the malls here do not have grocery stores, drug stores, or hardware and appliance stores. These stores could help to keep the malls afloat.

[melanieyuknis]

So interesting seeing the cultural shift in real time. I do wish the piece had mentioned the very deliberate overbuilding of malls that developers did in the 70’s and 80’s as part of loan scams or taking advantage of the loan process to make profit. It is a large part of malls collapse.

[MioHasMoe]

I hope in store shopping doesn’t die off, I really liked being able to buy products in person and try stuff on. Sigh 😔

[RatanakTevy]

I preferred malls over online shopping. Especially when it comes to clothes. Sad to see them disappear.

[Aviciifi]

They forgot to mention that things are generally cheaper when they’re bought online. People started realizing the same pair of shoes was marked up $20-$30 in the store than online. There’s cheaper costs to running a website than an entire store so the prices are marked up way higher when you buy things from the mall.

[PhuCatMan]

To comprehend the concept of the mall, you had to live in the pre-mall world. Shopping meant walking from one end of town to the other in the rain, snow, wind & hot sun. Crossing and recrossing streets. Taking an hour to find a parking spot then walking all the way back to that car when done. I remember being exhausted! Stores were often old, pre WWII buildings, no escalators and only an occasional elevator. Then the first mall opened and our world changed big time. Then they morphed into a kids-only place and now the Internet is driving the final nail in.

[Ryan]

The mall was fun as a teen in 1990-1991. We would hang out and try to talk to girls and go to the music stores to buy CD’s or cassettes. We would get something to eat at the food court and play video games at the arcade.

[aromview]

Even before the Covid, malls were declining and less people were visiting them, especially with online shopping.

[dalegribble]

When we opened our business in the mall, people were like, "you know mall's are dying right?" 25 years later and things have remained. The past 2 years have been rough but we survived. This subject doesn't necessarily apply to all malls, depending on where you are located. Working from home and ordering online is turning everyone cold and mechanical.

[jimmack]

When I managed a mall shoe store in the early '80's, we used "keystone" pricing - in other words, if something cost us $20, the retail price would be $40. At the end of the season, we'd mark down the stuff that didn't sell, and that's the only discount anyone ever got. Think about that - 50% margin, 100% markup. We had to pay the mall x% per square foot, and our sales folks worked on commission.

That's what killed malls, and it started well before online shopping was really a thing. People figured out they didn't want to pay for the mall environment, and were ok with less service.

[junjunjamore]

The main reason I like malls is the food court, no online shopping can replace.

[Benyikoko]

I used to go to the mall every friday afternoon with my grandparents in the 90's. To eat and play at the arcade and do some shopping! Literally every friday untill I was about 11 or so and my grandma started to show early signs of her alzheimers disease. To me, malls have something nostalgic and wholesome. Sad that they are disappearing..

[youtub]

I say, turn them into assisted/senior living.

Large rooms, mall walking, etc.

Tear up most of the parking lot and plant trees, gardens, solar farms...

[MichaelJohnson-lxdl]

Malls are competing with Wal Mart, Target, Amazon, and the rest of the internet. They need to offer value for money, products people need and want, and what they have always been good at - service. Our mall offers overpriced items targeted mainly towards younger people (I'm retired). Mostly high end clothes, sports shoes and clothes, jewelry, and a few phone stores. Montgomery Ward died a long time ago, Sears is out, no Radio Shack, no Hallmark, no Tom McCan Shoes, not even Hush Puppies. I know most of those stores are bankrupt but I don't have one store I care to visit at our mall. Put a Wal Mart in the mall and let them expand their product lines in several of the vacant stores. Put tools stores that carry quality tool lines you have to buy online now. Put appliance stores, mattress stores, furniture stores, discount shoes in the mall. How about specialized grocery stores with products from Europe, Africa, and South America. I think the real problem with the malls is they've raised the rent so high entrepreneurs have run the numbers and realize they can't make a profit there anymore. That's why there isn't even one store I would want to shop at located in the mall. There are two restaurants I frequent and neither of them is in the food court. My generation still puts on tennis shoes and goes walking there, but very few of them do any shopping.

[armstrongchan]

Let's face the truth, most people's disposable income is decreasing, and online shopping is cheaper, for saving money and saving time, people prefer shopping online, the cycle goes on and on....

[babygirl]

Malls have been dying for years now.
The only thing bad about online shopping is that you can't try clothes on.

[esdfxrv]

I live in south east asia, mall culture here is THRIVING for us. Students always go to the mall after classes, still in uniforms and play at the arcade/go to the food court. In my city alone theres over 6 malls all fifteen minutes within each other

[johnramirez]

I don't live in the US but I just hope malls won't completely die out because I like to buy clothes in person so i could try them.