Written By Reena Jari
Before the 2000s, shopping malls were places of congregation for younger generations to not only shop, but to watch movies, eat, and hang out. Malls are typically owned by real estate investment trusts (REITs), companies that own or operate real estate assets. These REITs lease out their retail spaces to tenants, and they pay the REITs in the form of base pay, operating expenses and a percentage of their sales. Bigger department stores, such as Macy’s or Nordstrom are called “anchor stores” as they drive foot traffic, and as a result they normally get charged a lower rent (CFI, 2020). Malls have recently experienced a decline in retail sales and are no longer seen as strong investments because of the many economic and technological changes over the past few decades. This decline is due to many factors, including the rise of e-commerce, the effects of COVID-19, and competition from other malls, which have all contributed to store closures, bankruptcies, and the deterioration of many malls. However, with the new generation of shoppers and promising new investors, malls may still have a future.
One of the largest contributors to the decline of malls is online shopping. In the early 2010s, as Amazon and other big e-commerce companies were launching their platforms, consumers switched to online retail platforms. A study examining the impact of e-commerce on retail noted that, “E-commerce sales are increasing because of how convenient online buying is, how accessible it is, and how many different things are available” (Kothari, 2018). This convenience and lower pricing reduced the competitiveness of brick-and-mortar sales. This has made it difficult for many retailers to turn a profit. Another driving factor of mall closures was the COVID-19 pandemic, as many people started working from home and no longer needed to travel as frequently. According to a quarterly JP Morgan Chase Institute report, there was a decrease in consumer foot traffic because less people were commuting to work, and employment centers were unable to support the same level of retail establishments from before the pandemic. This report noted that other establishments, like grocery stores and restaurants have bounced back since COVID, however retail spaces are still lagging because of the rise of e-commerce (Wheat, 2023). COVID-19 and the rise of e-commerce have shifted consumer retail behavior patterns to online, which has significantly impacted the performance of malls across America.
In addition to the external factors, the internal pressure of competition between malls has caused many vacancies. Malls with poor asset management are being forced out of business, as they are struggling to compete with newer malls that have more amenities and a broader selection of stores (Fung, 2017). For example, a struggling mall was recently acquired by Dillard’s after their previous owners were known for their poor management practices and “not paying their utility bills, [and] not paying property taxes” (King, 2025). Poor management structure causes stores to collapse, as it leads to financial instability making it very difficult to retain tenants. The closure of major retail stores also has a significant effect on the mall’s overall success. For example, the bankruptcy of Forever 21 led to the tenant loss of more than 200 stores in the United States. These stores often occupy very large spaces within the mall making it difficult for mall owners to fill the space once they close (King B, 2025). When large stores become vacant, it is easier for surrounding stores to then also break their leases or negotiate the rent, further weakening the overall occupancy and revenue of the mall (Thomas, 2019). The loss of an anchor store like Forever 21 shows how malls can be destabilized quickly and go into bankruptcy. Similarly, San Francisco Centre mall used to be a major retail location for the city. However, in recent years the mall has entered a “death spiral”. The mall has struggled with years of homelessness, shoplifting, and drug use which has caused nearly all of its retailers to leave the store. Once anchor stores such as Nordstrom and Bloomingdale’s closed, the mall ultimately collapsed as they lost significant foot traffic (King A, 2025). These examples demonstrate that both internal and external factors lead to deterioration of malls.
However, some investors and analysts see redevelopment potential in underperforming malls, in some cases the closure of struggling retail stores allows for stronger brands or a new type of business. As the Wall Street Journal explains, “That optimism reflects a surprisingly strong landscape for the mall industry. High-end malls are nearly fully occupied and rents are rising” (King B, 2025). Vacant spaces are being converted into restaurants, gyms, entertainment venues or alternative uses (Young, 2024). The mall owners have seen they need to adapt to economic and technological advances, so malls are evolving into entertainment centers rather than purely retail. The department store, Dillard’s, recently purchased the Longview Mall in Texas and is going to renovate and maintain the property unlike the previous owners that allowed it to collapse (King, 2025). Dillard’s decision to acquire this struggling mall and repurpose it shows how they understand the needs of the mall and are finding innovative ways to attract customers by enhancing consumer experience and foot traffic.
Lastly, younger generations are making malls more popular again. Studies show that “shoppers between the ages of 18 and 24 bought 62% of their total general merchandise purchases in stores last year. Shoppers ages 25 and older, by contrast, made 52% of their purchases in person, according to Circana” (King, 2026). Many younger shoppers want instant gratification when shopping and value the ability to try on the clothes in store. After the pandemic, Gen Z shoppers have shown an increased interest in demand for in person social retail experiences. The clothing brand Edikted was originally an online store, however, Gen Z has pushed for it to open physical mall locations. Overall, while many malls have struggled to adapt to e-commerce, changes post-COVID and bankruptcies, the industry might be making a comeback. Malls are adapting to consumer demand rather than disappearing entirely.
References
CFI Team. (2020, February 9). Retail REITs. Corporate Finance Institute. https://corporatefinanceinstitute.com/resources/commercial-real-estate/retail-reits/
Fung, Esther. (2017, April 18). The Internet Isn’t Killing Shopping Malls—Other Malls Are. Wall Street Journal. https://www.wsj.com/articles/the-internet-isnt-killing-shopping-mallsother-malls-are-1492513200?gaa_at=eafs&gaa_n=AWEtsqeyQkndm5s9NJE3WWcfBfrqDCRE8t0Hv3NnKyYV1fmulKcXMhFbmPqVJTS2KM0%3D&gaa_ts=69b4d2b6&gaa_sig=dEPEu3Mo9-U-YlsUt456ZDdWkx-iT1LTPeMrpHrfsTYPNs8_gLoHHA9T5IjlG2EIcZgWQrB8OQ9F0wWtd69fCA%3D%3D
King, Kate. (2026, March 9). A New Generation of Mall Rats Has Arrived. Wall Street Journal. https://www.wsj.com/business/retail/gen-z-shopping-mall-visits-15716009?gaa_at=eafs&gaa_n=AWEtsqedVUMjKXNF3DrDJQ016AggMwqLx6LYUNEpxWc9FF7VJhcLGItev_xdrCIY-dc%3D&gaa_ts=69b1be5a&gaa_sig=vmG5A1hISOfuQQ_Mp4HdJsHdm0wmkRRW8rxpZhorPWwmD57NAMndcTp7wvOoMEcVfMxnSBXi3NKYT5uEtY9gfw%3D%3D
King, Kate. (2025, August 25). Most Department Stores Are Leaving Malls. Dillard’s Is Buying One. Wall Street Journal. https://www.wsj.com/real-estate/commercial/dillards-mall-longview-texas-cd380a0b?mod=Searchresults&pos=5&page=1
King A, Kate. Carlton, Jim. (2025, October 7). Inside the Death Spiral of San Francisco’s Most Storied Mall. Wall Street Journal. https://www.wsj.com/real-estate/commercial/san-francisco-centre-falling-value-93e50970?mod=Searchresults&pos=5&page=1
King B, Kate. (2025, March 25). The Surprising Good News for Mall Owners: Forever 21’s Bankruptcy. Wall Street Journal. https://www.wsj.com/real-estate/commercial/forever-21-bankruptcy-shopping-mall-outlook-fd092cd7?gaa_at=eafs&gaa_n=AWEtsqcNaB_yvvGXBBbEV5kcIPgdIhLAw3B05-WrsMSDeYFEC55tT9fjqWolvUE0-Lk%3D&gaa_ts=69b1c091&gaa_sig=GrvwHvf0Z3b9QcZL_RSkofNLQm4n1ZooEz7BdTMZCLZsgci1hu_ujlsq2Y2PvYCXn7OmErMB6GcqTyR9ngJk7A%3D%3D
Kothari, Smitha. (2018, April 17) Examining the Impact of E-Commerce on the Retail Industry: A Comparative Study of Shopping Malls and Independent Retail Stores. doi. http://it-in-industry.org/index.php/itii/article/view/842/687.
Thomas, Lauren. (2019, October 1). Here’s why the Forever 21 bankruptcy could be really bad news for US mall owners. CNBC. https://www.cnbc.com/2019/09/30/heres-why-the-forever-21-bankruptcy-means-really-bad-news-for-malls.html
Wheat, Chris, James Duguid, Lindsay Relihan, and Bryan Kim. (2023, January) Downtown Downturn: The Covid Shock to Brick-and-Mortar Retail. JPMorgan Chase Institute. https://www.jpmorganchase.com/institute/all-topics/community-development/downtown-downturn-covid-shock-to-brick-and-mortar
Young, Avison. (2024, August 23). Empty Retail Spaces Transform Into Entertainment Hubs As Shopping Centres Evolve. Retail Insider. https://retail-insider.com/retail-insider/2024/08/exciting-new-concepts-are-driving-playful-and-immersive-retail-experiences-avison-young/