The rise and fall of the American shopping mall

The nation's first fully enclosed indoor mall opened on October 8, 1956. Called Southdale Center, the shopping center was located in the suburbs of Minneapolis, Minnesota, and contained shops, fountains, art installations, a courtyard, and a bird sanctuary.

Source: Insider

The mall was designed by Victor Gruen, an architect known up until that point for designing boutiques and storefronts. Gruen's mall was met with rave reviews, with some going as far as to compare it to Disneyland — incidentally, Walt Disney later cited Gruen's work as one of the inspirations for his Epcot theme park.

Source: Insider

The middle of the century was uniquely primed for the advent of the shopping mall. The birth of the interstate highway system meant the suburbs were growing at warp speed, and people had more money to spend post-World War II.

Source: Smithsonian Magazine

Not only that, but changing tax laws made it lucrative to invest in commercial real estate, leading to shopping centers springing up across the country. For example, six new shopping plazas were built in or near downtown Cortland, New York, between 1950 and 1970 even though the population had hardly budged.

Source: Smithsonian Magazine

By 1960, there were 4,500 large shopping complexes in the US, meaning an average of at least three new shopping centers had opened every day since 1956.

Source: Insider

The 1970s brought about another new invention: the food court. The first food court opened in New Jersey's Paramus Park Mall in 1974, with the hope that it would be a place for teenagers to safely socialize — and a way for mall owners to make more money.

Source: Federal Reserve Bank of Richmond

By the mid-1970s, 33% of all US retail sales happened at a mall or shopping center — a decade later, that number had grown to 52%.

Source: Insider, The New York Times

By 1986, there were 25,000 shopping malls nationwide, and they'd become de facto town squares. The mall was where teens hung out and where single people met for dates. Music and movies glamorized and skewered the mall in equal measure, while Consumer Reports named it one of the top 50 inventions that had revolutionized consumer life - alongside innovations like antibiotics and birth control pills.

Source: The New York Times, Vice

Mall culture reached a fever pitch in 1992 upon the opening of the Mall of America outside Minneapolis. The 5.6 million-square-foot megamall housed over 500 stores, a theme park complete with roller coasters, a full-size aquarium, a wedding chapel, and a movie theater. These days, the mall has its own comedy club and escape room.

Source: Insider, Federal Reserve Bank of Richmond

For a while, megamalls were wildly popular — and profitable. A decade after Mall of America opened, it was drawing 43 million visitors every year and reporting about $900 million in annual sales.

Source: Los Angeles Times

But American shopping habits had begun to change. Department stores had lost their cachet, replaced by one-stop shops like Walmart. Consumers started buying things from catalogs and TV shopping channels rather than strolling through the mall for pleasure.

Source: The New York Times

Plus, malls that had been around for 20 or 30 years were starting to look dated and rundown ...

Source: Smithsonian Magazine

... and the department stores, known as "anchor tenants," were frequently poached by the newer, more popular megamalls nearby, leaving older malls to slowly wither and die.

Source: Insider

Then the 2008 Recession hit, sending tenants' sales plummeting and mall vacancy rates soaring. By the end of 2009, there were dozens of so-called "dead malls" across the country.

Source: The Wall Street Journal

The 2010s marked a painful decade in shopping-mall history. Between 2010 and 2013, visits to malls during the holiday shopping season had dropped by 50%. By 2014, a fifth of the malls had "troubling" vacancy rates, while 3% had such high vacancy rates, they were considered to be dying.

Source: Time, The New York Times

In 2017, 7,000 retailers — many of them department stores — closed their doors. Anchor tenants like Sears and JCPenney left behind massive, empty shells at malls across the country that mall owners struggled to fill.

Source: Federal Reserve Bank of Richmond, Insider

Why did malls fall so hard, so fast? For one, there were simply too many of them, to the point that malls in close proximity would cannibalize each others' sales. For another, they were less necessary than they once were, thanks to the rise of online shopping.

Source: Federal Reserve Bank of Richmond, Insider

Plus, the middle class wasn't as resilient as it once was. Middle-income shoppers had shifted their spending toward cheaper retailers like Target, Walmart, and Dollar General, leaving department stores behind.

Source: Racked, Federal Reserve Bank of Richmond, Insider

Innovative developers are turning those empty malls into everything from medical centers to Amazon fulfillment centers. In some malls, abandoned stores are being turned into aquariums, haunted houses, and escape rooms.

Source: Fast Company, NBC News

But the shopping mall isn't dead yet. In 2019, American Dream, a 3 million-square-foot megamall, opened its doors in East Rutherford, New Jersey. It's the nation's second-largest mall after Mall of America.

Source: Insider

American Dream contains its own amusement park, water park, indoor ski hill, and ice-skating rink — not to mention room for hundreds of stores.

Source: Insider

But American Dream was a victim of bad timing: less than six months after its grand opening, the pandemic hit, and the mall was forced to close its doors. While the mall was hailed as the second coming of the Mall of America, that popularity never materialized, and American Dream has struggled financially since it opened, losing $60 million in 2021 alone and missing an $8.8 million debt payment in 2022.

Source: Retail Dive

Still, American Dream — and the 1,100 other malls nationwide — are hanging on, and in some cases, showing signs of growth. Ahead of the 2022 holiday season, foot-traffic data indicated that shoppers were returning to malls for their holiday shopping and that the bulk of sales would happen in person.

Source: Insider Intelligence

The country's largest mall owner, Simon Property Group, said in August 2022 that a mix of factors, including people moving during the pandemic and e-commerce brands looking to open brick-and-mortar spaces, were helping mall occupancy rates to rise nearly 2% compared to 2021.

Source: CNBC

In November, the company shared that it's on track to reach pre-pandemic occupancy rates in 2023. It's a sign that while struggling, malls may still have a future.

Source: Footwear News