The past, present and future of shopping malls
The future of malls is uncertain. Many large anchor stores have closed in recent years, not only leaving vacant retail spots but impacting the business plan of the entire mall.
The Illinois Environmental Protection Agency is utilizing some of the vacant space at Springfield's White Oaks Mall to construct its new office location.
Sean Neuert, Senior Infrastructure Advisor at Central Management Services, said the decision to place state workers at the mall was based on the logistical needs of the space with suitability being an added bonus.
“We had to look at what was available in Springfield for the square footage and footprint that IEPA was going to need, and the options were actually very limited,” Neuert said. “One of the things that is tied to the project is we are installing, I believe, 20 electric vehicle charging stations there."
An estimated 700 employees will utilize the space. Work is expected to be complete next year.
IEPA’s move to White Oaks is just one case of repurposing vacant space to create a mixed-use mall. The 2020 National Association of REALTORS case study found among participating malls, the second largest use was multi-purpose.
Over 30% of vacant malls are still being used as retail locations, but 16%, around one in every 25, became a multi-use space.
The conversation of malls becoming multi-use spaces seems like a new trend. But architecture critic and author Alexandra Lange said that malls were always meant to be community hubs. Lange wrote Meet Me By the Fountain: An Inside History of the Mall.
She spoke with Cole Longcor.
(Transcript edited for clarity)
Now, I know you know, there's various factors, and everyone kind of points to either the rise of like online shopping, or how the pandemic impacted malls and add to the decline. So, what are some of the actual factors we see at play? How did they get us to this point?
Well, one of the interesting things is I started working on my mall book in 2019. So, a lot of the people that I was talking to about the trajectory of the law, were really more familiar with the pre-pandemic model history, and when they all told me really universally, was that the pandemic didn't change the factors that were affecting the mall economy but accelerated them somewhat.
The pandemic didn't really add new headwinds to the mall. But it made some of the forces that were already at work happened faster, because people weren't going. So, bankruptcies, etc., were accelerated. Now, in terms of the factors that were already affecting, you know, the kind of growth potential for malls, let's say.
Before 2020, there are really three factors, internet shopping is only one of them. Since kind of the rise of internet shopping, in the early 2000s, everyone had been saying that it was going to kill brick and mortar retail. But in fact, before 2020, online shopping only was about 15% of the retail market. And that zoomed up to like the mid 30s, let's say 30% to 35%, during the pandemic, but it already has started going back down.
So obviously, like, during the pandemic, you know, everyone like moved a lot of their shopping online, but as soon as they had a choice to go and shop in stores, again, a lot of people went back to that, because they realized that there are a lot of things that online shopping really aren't good for. One of the other factors are going against malls, was really just that the United States is over malls.
We have way, way more, you know, shopping square footage per person than other developed nations. So, the retail market was already top heavy. So as soon as people started shopping less for various income related reasons, malls really had a hard time and started competing with each other for that market. And I'd say the third factor is really income inequality and the demise of the department store. You know, when we say that department stores are the anchors for malls, there's actually like a financial rationale to that.
Most malls need to department stores at minimum to sign on before they can be developed. And so, when those anchors go down, it creates this big void and lack of draw for that mall. And department stores are really hammered by the 2007 recession, because people began shopping more at discount stores and big box retailers than at kind of the lower end department stores like JC Penney, and Sears.
So, what successful malls have had to do is think of other things to do with those anchors. And a lot of malls are unsuccessful of that. And so, the bankruptcies of these various department store chains also really took them all down.
And that actually kind of ties in really nicely to my next question of, you know, we're seeing so many anchor stores either leave or just completely go bankrupt and close all their locations. But malls, of course, are still around. So, what does kind of the current situation look like?
Yeah, I mean I think that many malls are going to go out of business, but there is still an echelon of malls that is currently successful and can go on being successful. But the big trick is to replace those anchors and replace those department stores because I actually think department stores are not coming back. That's just not a way that like millennials and Gen Z are dying to shop and I think are they're much more attracted to individual brands and individual boutiques at this point, and department stores have lost their cachet.
So, I think the trick for malls is as quickly as possible, figuring out other uses for those big box spaces at the end of the malls and other things that are going to be drawers for people. And I think that the answer to that is really kind of multi fold. And it has to do with the larger direction for malls and retail, which is that people are moving away in a lot of cases from kind of clothes shopping, and towards more food, entertainment and community uses.
What that means is, your former department store can become a church, it can become a medical facility, it can become a trampoline park, it can become a higher end food hall. And all those things will bring people back to the mall. But it's a very different mindset than just getting a department store chain to go into that box.
Great. And I guess my last question would just be then that our current local mall here, the state EPA is moving their offices into the old Sears. And there's a variety of reasons for that, from size of the space to being able to have plenty of parking. But do you think, aside from traditional dual or multi-use, that there is this avenue for local government to be able to get involved and be a part of that conversation?
I do. I absolutely do. And I see government offices as being more akin to medical facilities that have moved into malls, which they've been doing for the past 15 or so years. So yeah, it comes down to like, what, like what is a part of a city that is growing, does need more space, and does need convenient parking and a place that everyone knows how to get to? And, you know, outpatient medical facilities or something like that.
I think government offices are also something like that. And the great thing about both of those uses is there are synergies with the traditional aspects of a mall, in the sense that like, in both places, you're often waiting around. Wouldn't you like to be able to get lunch on site, or go to a drugstore on site or do a little shopping like while you're waiting for your paperwork to come back, etc., etc.
It's also good for the employees to have a place that they can exit the office and, you know, go get lunch, walk around, have a break on their lunch hour.
One of the things that I point out in my book is that Victor Gruen, the father of the shopping mall, always intended malls to have some community facilities. And if you look at the floor plans of a lot of the early malls, you know, late 50s, early 60s, they may have a worship space or they may have a DMV or other small-scale office in them. So that was part of the DNA of the mall from the beginning.