This article appears in print in the August 2018 issue. Click here for a free subscription.

Everyone knows the American shopping mall is dead. The huge department stores that once anchored the nation’s malls are closed or closing. So are many of the chain stores that used to line the mall corridors between those anchor stores. The consumers who once thronged those corridors now shop from the comfort of their homes, lured by the convenience, pricing and inventory of online services, some offered by those same brick-and-mortar retailers. In some places, entire malls stand vacant. One investment bank says 200 American malls will be bulldozed by 2022.

And yet …

... Try finding a parking place during the holiday season at the region’s shopping malls. Check out the crowds at popular retailers like the Apple store, or whenever a popular, of-the-moment retailer opens a new location.

Perhaps the two biggest validations that there’s life remaining in American shopping malls are that the online retailers, those widely credited with the demise of the mall and its traditional tenants, are themselves now opening brick-and-mortar stores in shopping malls, and that property owners are pouring millions into malls, and not just for a new coat of paint or shiny planters.

The American mall “is going to live on, but it’s going to look very different from what it looks like today,” says Marcie Merriman, executive director for growth strategy and retail innovation with Ernst & Young in Columbus, Ohio.

The transformation is already well underway at properties in the Seattle area. Simon Property Group, the largest shopping mall operator in the United State, plans a dramatic remaking of Northgate Mall in North Seattle. One of the region’s oldest, it will still be a shopping mall, although retail space could be trimmed from close to 1 million square feet now to 500,000 to 700,000 square feet in the new configuration. Added to that, however, will be several hundred units of housing, 500,000 to 750,000 square feet of Class A office space and a hotel.

In the south end of the Puget Sound region, Simon is taking space at Tacoma Mall occupied by a Sears store designated for closing and replacing it with several buildings to hold smaller retail tenants and a new movie theater.

Considered one of the nation’s most successful retail properties, Kemper Development's Bellevue Square and the adjoining and connected Lincoln Square and Bellevue Place (marketed jointly as The Bellevue Connection) have grown to more than 5 million square feet of retail, office, hotel, entertainment, dining and residence space.

Toward a mall and the right visitors: When it opened in 1950, Northgate Mall was suburban in concept even though it sat inside Seattle city limits. Its owner, Simon Property Group, plans a "reimagining" that will coincide with the arrival of a Northgate light-rail station, changing the mall's footprint from the traditional, above, to a more urban center encompassing retail, residential and office space, below.





Perhaps the most dramatic remake of a retail property can be found in Kirkland, home of the former Totem Lake Mall. A relatively nondescript 35-year-old property is being transformed into the Village at Totem Lake, a mixed-use development designed to combine all the elements of a small town and a suburban mall in one property.

This sort of transformation is what a lot of malls will need to accomplish if they plan to remain relevant, says Fred Bruning, CEO of CenterCal Properties. “Totem Lake had fallen out of relevance in part because of other centers built in the area,” he says, “but also because the way people shop and live is a bit different than it was in the ’60s and ’70s.”

In a 40-year career in retail development, Bruning has seen the life cycle of the American mall. He’s a former real estate director for Sears and helped negotiate leases for that once-dominant retailer’s locations at Southcenter, Alderwood and Tacoma.

The mall, especially a big regional development of the type that would be anchored by a Sears and other department stores like The Bon Marché (now Macy’s) or Frederick & Nelson, replaced the tired, dowdy downtown business districts with a variety of stores in one place and acres of free parking.



“Malls were new and fresh,” he says. “It was a big event for a community when one opened.”

In their standard barbell configuration of two or four anchor stores at either end of long corridors, “[Malls] were the destinations you wanted to seek out and hang out in,” says Matt Billerbeck, SVP in the Seattle office of CallisonRTKL and global leader for shopping and entertainment districts at the architectural firm. “They pulled together a collection of retailers that didn’t exist in your community, put them in one place, with parking. They didn’t try to do anything too sophisticated. They just put together great stores with enough amenities to keep you shopping.”

And that practice, says Kemper Freeman, contributed to today’s problems for malls. “One of the biggest mistakes people who own real estate make is to think you have bought an annuity,” says the CEO of Kemper Development Company. “You have to think of the property as a living organism that you have to continually feed and remodel and update, and if you’re not doing that, you’re on your way to losing money.”

A lack of reinvestment wasn’t the only problem malls built in the ’50s, ’60s and ’70s encountered in the 2000s. The United States built far more retail space per consumer than anywhere else.

“We’ve been overbuilt since the 1990s,” Freeman says. “I can’t explain how it continued to work as well as it did for as long as it did.”

Then came the internet. Interestingly, those in the business don’t put nearly as much blame on it as conventional thinking might suggest, but with online shopping duplicating much of what could be found at the mall, those properties lost a compelling draw to pull people out of their homes and into their buildings.