For countless Americans—especially those who came of age in the postwar years—malls were the new town square: a place to shop, eat, gather and meander. Envisioned as perfectly pristine, cast against the gritty danger of urban centers, the American mall became the image of suburban consumerism, the "pyramids to the boom years," as Joan Didion once wrote. But like the pyramids, the culture that the malls once honored—and survived off of—is starting to vanish. In 2014, traditional retailers will, for the first time, generate half of their sales growth from the web. For the American mall mogul, the reality is clear: rethink what it means to be a mall, or die.
The last new enclosed mall was built in 2006; 2007 marked the first time since the 1950s that a new mall wasn't built in the United States. The 2008 recession was a gut-punch to already flailing mall systems: at a 1.1-million-square-foot mall in Charlotte, N.C., sales per square foot fell to $210, down from $288 in 2001 (anything below $250 per square foot is considered to be in imminent danger of failure). Between 2007 and 2009, 400 of America’s largest 2,000 malls closed. According to one retail consultant, within the next 15 to 20 years, half of America’s malls could die.
A one-stop-shop where people could pick up a bite to eat or chat with friends from across town was never an intrinsically American idea. Preceded by the Roman forum and the Greek agora and medieval market towns, the mall also owes a debt to the 19th century department store, where brands like Sears and Macy's taught a newly urban America to become very comfortable with conspicuous consumerism. In its truly modern iteration, the mall was the brainchild of Victor Gruen, a short, stout, unkempt man from Vienna who came to the United States shortly before the outbreak of World War II. Gruen spent his first few years in America as part of a theatrical group, then turned to designing a few stores (including a 163-acre version of a mall), but he's best known for his design of the Southdale mall in Edina, Minnesota. Before Southdale, malls operated much like traditional store-lined streets, with their entrances facing outward along a single-story—in Southdale, Gruen invented the idea of a two-story, air-conditioned, inward facing mall, rooted at its center by a light-filled square replete with fountains, sculpted trees and a fishpond. After Southdale's 1956 opening, journalists decreed that the vision of retail it embodied had become "part of the American Way."
In the common narrative, the mall's rapid expansion is credited to urban flight and growing post-war wallets—and while the mall's nascent years certainly were marked by suburban growth and economic prosperity—it doesn't tell the whole story. In 1954, Congress, hoping to stimulate investment in manufacturing, accelerated the depreciation process for new construction. As Malcom Gladwell explains in the New Yorker, earlier tax law allowed new businesses to set aside some of its income, tax free, to account for depreciation (the idea that from the instant you build a building or buy a new piece of machinery, it begins to lose value, until you'll eventually need to replace it). "For tax purposes, in the early 50s the useful life of a building was held to be 40 years, so a developer could deduct one-fortieth of the value of his building from his income every year," Gladwell writes. "A new forty-million-dollar mall, then, had an annual depreciation deduction of a million dollars." But, starting in 1954, the depreciation process could happen at an accelerated rate—developers weren't limited to taking just a million dollars out each year; instead, they could deduct much larger sums, which would be counted, technically, as depreciation loss—completely tax free money. "Suddenly it was possible to make much more money investing in things like shopping centers than buying stocks," Gladwell writes, "so money poured into real-estate investment companies."
Malls weren't just feeding America’s new suburban population; they were turning out huge sums of money for investors. "Suddenly, all over the United States, shopping plazas sprouted like well-fertilized weeds," wrote urban historian Thomas Hanchett in his 1996 article "U.S. Tax Policy and the Shopping-Center Boom." "Developers who had been gradually assembling land and mulling over the shopping-center concept abruptly shifted their projects into high gear." The first wave of shopping malls born from projects "shifted…into high gear" washed over the country in 1956—the same year Gruen's Southdale opened its climate-controlled doors.
For the most part, investors didn’t care where the mall was being built—after all, most simply used malls (both enclosed and strip malls) as a means to take out as much money under accelerated depreciation as possible, then sell a few years later for a profit. Instead of building malls in the center of suburban developments, investors looked for cheaper land beyond the suburbs, and construction of shopping malls turned from being what Hanchett refers to as "consequent" (following housing expansion) to "catalytic" (propelling housing expansion). New malls weren't necessarily a sign of a growing population. In an example borrowed from Hanchett's study, Gladwell notes that Cortland, New York, barely grew at all between 1950 and 1970; in the same period of time, six different shopping plazas were built within two miles of Cortland's downtown. In the 1970s, a wave of tax revolts that lessened property taxes across the country also began to deprive local governments of important revenue. Looking for businesses that could be sources of income, a shopping mall, with its potential for sales tax revenue, became an appealing entity for a local government to encourage.
Looked at from Hanchett's perspective, the American mall's rapid decline doesn’t seem nearly as surprising. Investors hoping to pull out as much money as possible through short-term depreciation weren’t interested in improving preexisting malls, so the American landscape became bloated with huge malls. But malls also began to leave obvious marks on American culture. The mall food court spawned brands like Panda Express and Cinnabon. Malls produced a bevy of micro cultures, from "mall rats" to "mall walkers.”" Mall culture became pop culture, weaving its way into music, movies and television.
Eventually, the American fascination with malls hit a feverish peak—in 1990, 19 new malls opened across America. But beginning in the late 1990s, the culture that once fed the American mall started to change. Shopping centers that hadn't been renovated in years began to show signs of wear and tear, and the middle-aged, middle-class shoppers that once flooded their shops began to disappear, turning the once sterile suburban shopping centers into perceived havens for crime. Increasingly rundown and redundant, malls started turning into ghost towns—first losing shoppers and then losing stores. Today, the vacancy rate in America's regional malls hovers around 7.9 percent; at its peak, in 2011, vacancy at regional malls was 9.4 percent.
A number of dead malls will be condemned to execution by bulldozer, but not all. In some communities, a dying mall offers an opportunity for rebirth—the chance to turn a poorly conceived shopping center into something that serves the needs of the community at large. As Ellen Dunham-Jones, professor at Georgia Institute of Technology said in a 2010 TED talk, "the big design and redevelopment project of the next 50 years is going to be retrofitting suburbia." In some cases, dying malls have been turned into office spaces, while others have found second lives as churches, community centers or even hockey rinks. By reimagining the American mall, it seems that some are finally becoming the downtown that Gruen originally envisioned—walkable, mixed-use areas that bring a renewed sense of urbanism to a dying suburban landscape.