Reviving America's Dead Malls

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The Galleria Mall used to be one of Cleveland's main shopping hot spots, with dozens of bustling shops spread throughout the two-story building, but that all started to change around 2002 as the economy suffered through a brief recession.

"We used to have Williams Sonoma, Brookstone and Ann Taylor, but they've all left now," says Vicky Poole, who spent eight years working at the mall, first handling store displays and planning and later serving as the marketing and events director. "It was a mass exodus."

The makeup of the shopping center gradually shifted. Much of the space that had been occupied by boutiques was soon snatched up by a banking chain called the Dollar Bank. Then in 2005, Poole decided it was time to try and rehabilitate the mall she'd spent years working in by getting a bit creative.

"We installed a curtain in our food court and used it to create an events center," Poole says. That small step proved to be very effective. "It's become a vibrant place where people can hold weddings and other events."

Last year, Poole began working on a more ambitious project to transform the Galleria Mall from a dying retail space into a greenhouse that would not only help educate the city about healthy food, but provide it. Earlier this year, the project, dubbed Gardens Under Glass, received a $30,000 grant from Cleveland's Civic Innovation Lab.

Now, rather than gorge on salty pretzels, fountain sodas and fast food, shoppers can take advantage of a weekly market full of fresh produce and greens. And that's just the beginning. "We have a salad bar that will open next month and we have some green cleaning products that are coming in soon," Poole says. "We hope that this will attract more business."

Poole's project is just one of many that is transforming the function and feel of malls as we know it. In cities throughout the country, dead and dying malls are being redesigned to serve community functions as medical centers, arts centers and much more. In Tennessee, the Tri-County Mall shut down and re-opened as a large church. Similarly in Colorado, a dead mall was repurposed to serve as a housing development. Several malls across the country with vacant space have even installed small indoor water parks to liven things up. In other cases, old malls are simply being swapped with other retail businesses like car dealerships, big box stores and flea markets.

Rumors of the Malls' Demise Are Greatly Exaggerated

For much of the past decade, publications have speculated the era of malls may be nearing an end in this country, and indeed there seemed to be lots of evidence to back up this theory. Between 2007 and 2009, more than a fifth of the nation's 2,000 biggest malls closed up shop. To make matters worse, only one new enclosed mall had opened up in that time.

"A tremendous amount of overbuilding took place in this country. If you go down any highway in America, there are stores everywhere," says Howard Davidowitz, chairman of Davidowitz &  Associates, a New York-based consulting company for the retail industry. "America is tremendously overstored."

Yet, as bad as the situation is for America's shopping malls, the truth may be more optimistic than originally predicted. Rather than suffering a great die-off, the malls of this country may just be undergoing a great makeover.

According to Davidowitz, just because the shopping center's business crumbles doesn't mean the owner is suddenly out of options. "The real value is in the raw land," he said. "What you're losing money on is the operation of the mall, so it may make sense to try and monetize the land, either through a hospital, condo development or anything else that you believe the community needs." But it wasn't until a few years ago that mall owners actually took advantage of this option, and it wasn't entirely by their own volition.

"Empty malls that had died in the mid-90s were still hanging around in the early 2000s, but by the middle of the decade people started to use the Internet to complain about it and become more proactive," said Peter Blackbird, the founder of Deadmalls.com, which catalogues the fate of malls throughout the country. "These malls were owned by real estate holding companies content to sit on them for a while, but people eventually applied pressure to change that."

Are Mall Deaths Better for a Community?

While few would ever protest having a hospital or a new water park added to their community, there is still some debate about whether repurposing a mall can help or hinder a city or town.

The main drawback to transforming a mall into something like a church or community center is tax revenue. "The communities really plan around that tax revenue from sales taxes and property taxes coming in," Blackbird says. But according to advocates, this problem has to be balanced against the net positives for the community.

"We're seeing a lot of community colleges, medical services and immigrant businesses moving into defunct retail spaces," says Ellen Dunham-Jones, an architecture professor and author of Retrofitting Suburbia. "While such uses don't bring in the tax revenue that the former shopping center did, they help to complete and serve their communities in very valuable ways."

Blackbird said the alternative to repurposed malls can be much worse. When a dead mall is allowed to sit unused for a long period of time, it's not only an eyesore, it can lead to serious problems in the community, namely crime. He highlights one particular shopping center, the Dixie Square Mall in Chicago, which sat vacant for years. "The roof caved in, homeless people moved in and a lot of crimes happened there," he said. This hurt property values for the suburban community nearby.

The Future of Malls

Each expert has a different take on what malls may look like in the next few years, but the general consensus is that America will still have malls.

Davidowitz, the retail consultant, believes that America will become a land with many mall spaces but few actual malls, partly because of the poor economy and partly due to the increased popularity of shopping online. "The opportunity for brick and mortar retail will be less in the future, and when they do build, it will be more targeted. It may take decades for all of this extra mall space to be used and many of these empty spaces will have to be filled with alternative uses," he says.

On the other hand, Blackbird believes that malls will actually become larger, but "fewer and farther between." Instead, he thinks more Americans will continue shopping at big box stores like Wal-Mart for most of their consumer needs, then head to metropolitan areas for more "complex shopping needs."

For those like Vicky Poole, who are at the forefront of redesigning America's malls, the shopping centers will still exist, but under a different name. "Why is it that we need to refer to it as a mall?" she says. "Why not just call it a mixed use center or a lifestyle center?"

A lifestyle center? I guess it has a certain ring to it, but it's still not as catchy as mall.

—For a comprehensive credit report, visit the BankingMyWay.com Credit Center.

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