The slow contraction of the market for enclosed suburban shopping malls is part of a long-term trend, exacerbated by the credit crunch. I found a 2005 report from the International Council of Shopping Centers (hardly an anti-mall bunch!) that included a very noisy graph of shopping mall openings over the years. I chose to smooth the curve by (arbitrarily) calculating three-year moving averages instead, rounded to the nearest whole #:
The steep decline from the early ’90s occurred despite bubbly, credit-happy economies in the late ’90s and mid ’00s. Also, keep in mind that malls take several years to finance and build, so arguably developers quietly began aborting mall proposals around 1990, when the power center began its meteoric rise (and subsequent decline; Emerging Trends 2013 ranks them as the worst property type to invest in). The numbers since then (also from ICSC and from press reports) have been just dismal, both before and after the 2008 crisis:
Even in a recent article trumpeting “Return of the Mall!,” Retail Traffic magazine admitted that “there is little, if any, room for new enclosed regional mall development… Even prior to the current downturn, the U.S. mall market was near the point of saturation. During the 1970s, the heyday of the mall, U.S. developers delivered a total of 375 million square feet of new space. By contrast, in the 2000s, new mall deliveries fell 62 percent, to 144 million square feet, according to research from CoStar.” The best that the article can muster is that trophy malls are still prospering, and that other shopping-center categories have been hit by bigger sales declines. Personally, I don’t know if that’s saying much; I’ve always thought that power centers were most vulnerable to online shopping — out-competed on price and selection (the only selling points of big box) — and we’ve seen that with the recent collapse of many big-box chains.
* City Creek Center in downtown Salt Lake City replaced two enclosed malls that had failed. Net mall count was still reduced by one.
** Emerging Trends ranked “severely handicapped” suburban office the second-worst investment. Just as with malls, this trend is a long time coming: nationally, suburban office vacancy rates used to track downtown office vacancies, but decoupled in 1998 and have stubbornly remained about 5% higher through peaks and troughs ever since. Similarly, the best housing investments were ranked as infill/intown, senior, student, and affordable, with golf course communities and master-planned resorts ranking a shade above “abysmal” as the absolute worst property subsectors to be in.