Why U.S. Malls Are Disappearing

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Published 2021-03-04
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

All Comments (21)
  • @MF-ty2zn
    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
  • 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.
  • @PhuCatMan1
    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.
  • @babygirl6789
    Malls have been dying for years now. The only thing bad about online shopping is that you can't try clothes on.
  • @rxonmymind8362
    They're closing because the middle class is disappearing. Look at 1950 vs now. We have less middle class who can afford going to malls. Wages have been stagnant for decades and we wonder why?
  • 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.
  • @dalegribble60
    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.
  • @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 😔
  • @kodik3263
    The middle class is Disappearing too. Only the Rich and the poor will be left!
  • @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.
  • 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.
  • @RatanakTevy
    I preferred malls over online shopping. Especially when it comes to clothes. Sad to see them disappear.
  • 1980's - "Video Killed the Radio Star" 2,000's - "Internet Killed the Retail Stores" 2020 - "Covid-19 killed whatever was left"
  • @kc4cvh
    Another problem not mentioned here is the increasingly unruly environment in which malls exist. When gang violence invades the mall, such as in the multiple mall shootings over the Black Friday weekend just past, an anchor tenant disappears within a year and you have a dead mall in less than five years.
  • @jimmack1504
    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.
  • @afrommation5279
    Teenagers MADE malls. By the time I left high school many malls had huge policies against letting teens gather in large spaces without adult supervision. Teens don’t have safe hang out spaces anymore. Between mass private property restrictions and internet access, kids just stay at home.
  • The main reason I like malls is the food court, no online shopping can replace.
  • @adam1885282
    I stopped going to malls when every square foot of walkway was crammed with hyper aggressive kiosk sellers
  • @mercoid
    Imagine feeling sad for the demise of the shopping mall as an American institution. I never thought I would, but this feels sad. Particularly in light of what is replacing them.