What Will We Do With Our Dying Malls?

City Creek in Salt Lake City.

The holiday shopping season is just wrapping up and that means a lot of people headed to the mall. But as is no surprise, fewer and fewer people are actually visiting America’s malls.

I’ve written before about malls, but The Atlantic Cities recently provided a useful, if gloomy, article about the future of brick and mortar retailers generally and malls in particular. The article basically states what everyone already knows: that people are shopping more and more online and less and less at malls. In other words, demand for mall space is evaporating and it won’t come back.

These mall and shopping center stalwarts are closing stores by the thousands, and there are few large physical chains opening stores to take their place. Yet the quantity of commercial real estate targeting retail continues to grow, albeit slowly. Rapidly declining demand for real estate amid growing supply is a recipe for financial disaster.

That pretty much describes the situation in Utah, where there are too many malls and high vacancy rates at older centers. And bafflingly, Utah is adding new malls all the time, with the Outlets in Lehi opening this year on the heels of City Creek in Salt Lake City. It boggles the mind. It’s especially odd that certain media outlets are basically running free PR for these places even as shopping centers down the street crumble and fail.

The Gateway Mall in Salt Lake City. When the City Creek mall opened down the street in 2012, the Gateway lost a bunch of major tenants.

The Atlantic Cities article provides a more detailed analysis, stating among other things that 10 percent or more of the 1,000 largest malls in the U.S. will likely fail in the next decade. Many will be demolished. Others will be repurposed. It’s a bleak situation:

These malls are becoming ghost towns. They are not viable now and will only get less so as online continues to steal retail sales from brick-and-mortar stores. Continued bankruptcies among historic mall anchors will increase the pressure on these marginal malls, as will store closures from retailers working to optimize their business. Hundreds of malls will soon need to be repurposed or demolished. Strong malls will stay strong for a while, as retailers are willing to pay for traffic and customers from failed malls seek offline alternatives, but even they stand in the path of the shift of retail spending from offline to online.

Utah’s population growth will help stem the tide for a while. And a mall like City Creek could survive for a very long time because it’s propped up by the LDS Church and doesn’t actually have to make any money.

Provo’s Towne Center Mall. This mall’s days are numbered, and that number is not very big.

But in the end the data — not to mention many people’s intuition — clearly indicates that malls are not going to be epicenters of vitality and prosperity in communities of the future. The cities that succeed will be the ones that figure out what to do with their malls so the transition to something different is smooth.

The mall-ish Riverwoods in Provo. The managers of this development are battling falling demand by hosting more and more events to draw people in. Many of the events are successful, but in between the area remains conspicuously underused. This development is also plagued by major design issues that almost completely undermine its attempts at mixed uses.

CRAP ALERT!* New Mall Opens in Lehi

In what seems like an exercise in absurdist theater, Lehi has just opened a new mall: The Outlets at Traverse Mountain. Apparently no one from that city has ever visited any other cities and consequently observed that malls are a colossally bad investment. Just last week in fact I mentioned that the best local example of a mall is in serious trouble.

In reality this is Salt Lake City’s mall bubble expanding outward; each successive developer or community thinks a new mall will be an economic savior. And it is, at least until another developer comes along and builds another, better mall.

In economic and development circles, this approach (usually as applied to housing) is often referred to as a Ponzi scheme. Building ever more malls as the existing ones fail seems to fall into the same category.

So who is foisting this Ponzi scheme onto Utah County? Apparently it’s the Craig Realty Group, a Newport Beach-based shopping center developer “that specializes in upscale factory outlet centers.” That quote comes from this BS-laced press release.

Naturally, the Craig Realty Group (via KSL) — which seems to have used a computer and perhaps Google maps but never firsthand observation of the real world — eschewed the phrase “Ponzi scheme” in favor of this justification for the mall’s existence:

The developer wanted the location for a lot of reasons. It is right off the freeway, in between Salt Lake and Provo, and next to Cabelas. The variety of businesses and prime location should attract male and female consumers, especially with the new mall bringing many stores to Utah for the first time.

This is perhaps a good time to remember the many failings and false promises of Cabelas and big boxes generally. (Also, a Scheels recently opened in one of the worst buildings in Utah, and it’s just up the freeway from Cabelas.)

Of course, I could be wrong. Perhaps in 100 years this mall will be a thriving epicenter of social life and economic vitality. But if that happens it would be truly unprecedented.

Orem has a dying mall. Apparently, Lehi wanted one too.

More likely, this project will provide an example of how not to grow a city. It’s a perfect example of big, cataclysmic investment that operates under a failed model of placemaking. It’s car centric in a world moving away from cars. It’s nonlocal and generic, both in what it offers and in its design. There is no precedent for its long term success — not just economically but as an asset to a thriving and vibrant city.

In other words, in the end it’s just more crap.

*Too often people who build crap aren’t called out for it. The KSL article about the Lehi mall is a great example, failing as it does to critically examine anything regarding malls generally or the project specifically. After my recent post on crap, I decided that if no one else is going to call these people out, I guess I should.