A world filled with exciting ideas.

Since they started popping up in the 1950s,

malls have been the quintessential

American shopping experience.

Bustling temples dedicated to the wonders

and excesses of retail, food service and entertainment,

the rise of the mall coincided

with the growth of the suburbs.

The heyday of the malls really is the 1970s,

sometimes referred to as the malling of America.

They really thrived at providing

some sort of public gathering space,

some sort of social life,

in addition to actually giving people places to shop.

Over the past few decades before then,

lots of developers were building malls,

and it kind of coincided with the growth of highways.

So as more people started traveling

and interstate started being built,

developers really wanted to put something

to attract people to stop.

Take a look

at an average American mall today however,

and you'll see a very different picture.

Closed stores and empty hallways

became the norm in many malls

even before COVID-19 delivered them

another set of problems in 2020.

So what happened?

This is the story of the rise and fall of American malls.

When malls worked best, they survived and thrived

thanks to their anchor stores.

Those are the stores

that are on the edges of the malls

and that are outward facing to the parking lot.

So if you're a shopper,

you're gonna walk through one of these big,

usually a department store.

So if you're thinking about Macy's or Sears or JCPenney,

those are called the anchor stores.

So once shoppers are done shopping there

maybe they wander to the middle part of the mall,

shopping at the other apparel shops

or even going to buy some food.

But you really had to have a reason

for people to shop in the first place.

Because anchor is bringing all those people,

they tend to pay very little rent.

Around 80% of income from all owners

come from the inline stores inside the mall.

Over the past few decades,

malls have been facing challenges from all sides.

The first being, there's just too many of them.

As early as in the 90s,

the malls were beginning to compete with each other.

We have a lot more

retail square footage per capita than Canada.

We have only seven times

more retail square footage per capita than Europe.

After the 2008 financial crisis

lowered retail spending across the board,

malls and especially their department stores

also had to contend

with a new challenge that was growing fast.

Malls started to suffer in the early 2000s

with the rise of online shopping.

Suddenly they didn't have that captive audience

who had to go to the mall to buy something.

You didn't have to get up,

get in your car drive all the way to the mall

and then see a bunch of other people.

You can just do it from the comfort of your home.

Department stores overall

have become less relevant over the years.

Many have fallen totally off

and that's Sears, JCPenney.

Several bankruptcies in this space

have really hurt the industry.

But as department stores goes

so does the mall oftentimes.

So if department stores start closing locations

that means they're usually leaving malls.

This is the Greenbrier mall in Southwest Atlanta, Georgia.

It's in many ways emblematic

of the problems facing malls today.

It's been there since 1965.

So for more than half of a century

it's been serving this area of Atlanta

that's predominantly black

and also as middle-class neighborhood.

It started with anchor stores that were department stores.

So you had JCPenney and then Riches

which was later bought by Macy's.

So you had these two national chains.

It had the first Chick-Fil-A in a mall

like that type of format.

So when you think about the history of malls

like Greenbrier had like the perfect template

but now Macy's will be exiting the mall

meaning that the mall will be left without an anchor

which is vital to attracting other shoppers

to come into the stores.

Greenbrier then because it's kind of an example

or a test for all these other middling malls across America

about what do you do when these large department stores

as a business decision on their end

are trying to just stay in the high quality malls,

how does a middling mall survive?

What's their next strategy?

Greenbrier is a textbook example

of how closely the deterioration

of the middle class in the US

is tied to the health of its malls.

The median income for the surrounding area

has reduced by $6,905 over the past 15 years

to a total of $20,756 per year.

And yet residents and store owners hope that Greenbrier Mall

will see better days.

Malls are made up of the people

and communities that help fuel them.

Greenbrier is still a place that people go to and cherish

even if on paper it doesn't have the elements

that make it a thriving mall.

Well, a lot of the existing constituents

and residents there feel in many respects

that they worked hard their whole lives

to be able to experience the American dream

The single family, suburban house in a leafy yard

near a big mall that had a great Macy's.

They're very reluctant to see that taken away from them.

Now that Macy's has gone,

Greenbriar may try to take inspiration from what many malls

were doing in the years following the financial crisis

focusing not on shopping but experiences.

That was a trend we were seeing

in 2016 up into the pandemic pretty much.

And by experiences

I mean everything as traumatic as a waterpark

or hosting like concerts to have people wanna come

other than just to buy stuff.

Having Instagrammable moments,

making sure your store is pretty

that people wanna take a photo

and post it on Instagram or Twitter.

Historically the mall has always been a place for teenagers.

You like to hang out, see your friends

and also kind of be seen at the mall.

And that hasn't completely changed.

Like before the pandemic, about 95% of gen Zs,

so today's teenagers had gone to a mall

in a three month period.

So teenagers are still going to the mall

and they've always been key to having thriving malls

because they're coming into their spending power.

And once you went over teens

hopefully you're really winning

over a loyal customer for life.

But thanks to lock downs across the country,

most malls at one point or another were shuttered in 2020.

That means no one using the multi-billion dollar

American Dream malls indoor ski slope, no one going

to the King of Prussia Mall's indoor skydiving attraction.

Basically the pandemic gave malls

what they didn't need.

Another problem.

What would your net income

or net operating income

have been in 2022 without COVID

and what is it now in a post COVID world?

So, our view is it was a roughly 10% hit

to net income over that period.

That's Vince Tibone from the analytics

from Green Street Advisors, which rates American models

from A to D just like a report card.

And if malls did have a report card,

they wouldn't exactly make honor roll.

Here in the US, out of 1000 malls in the country,

there are roughly 250 malls we grade A- or better.

The B and C quality malls

which is the vast majority of the malls by count

we think are on a negative trajectory.

And it's gonna depend on

a lot of the local dynamics ownership decisions

around how much money do you invest in the property

will determine whether this mall

can survive as retail or rapidly melting ice cube.

While there have been a few bankruptcies

among real estate investment trusts

that own mostly B to D malls in the past few years,

A models really are doing just fine.

Some of the most productive shopping centers

in the country are super high end.

So I'm talking about Bal Harbor Shops

down in Miami, Florida,

there is Americana Manhasset in Long Islands, Gold Coast,

the Grove in Los Angeles.

These are places that have all high end stores

and have done quite well.

A lot of that has to do with efficiency of their property.

So their sales per square foot are really high

but also they've invested a lot in their actual mall

'cause it has to look beautiful,

it has to have all the services

that a wealthy shopper expects.

So what will the future hold

for less sought after malls

that can't revive their golden years?

For many of these malls, it will mean closure

and then hopefully conversion.

If they can't get a new use to come in,

it's expensive but you can just demolish it.

And there are still quite a lot of sites

just sitting waiting.

Amazon has been picking up more and more of those

building their big fulfillment centers.

Also, a lot of communities see this as an opportunity

to redevelop, reinhabit this dead mall

to help that community meet the challenges

it was never originally designed for.

The number one reuse of an existing mall is as workspace.

It's actually pretty easy to just throw some carpeting down,

cut a few more windows

and turn it into office space.

Sort of number two reuse of malls

is either medical, healthcare or education.

Lots of great examples of community colleges

all the way down to elementary schools moving into malls.

And then the third strategy that I wish happened more

is actually just demolishing them all and regreening.

Either reconstructing the wetlands that used to be there

And that frankly we never should have built on

in the first place

or providing community parks and gardens.

While most analysts say post pandemic retail shopping

could bring some life back into the American mall,

many are not long for this world.

Depending on where you live,

It might be time to make one last visit,

grab some food, do some shopping and say farewell.