Imagine for a second that it's 1952 and you and your picture-perfect family have just moved out to the brand new suburb of Happydale. But you're frustrated because there aren't great shopping options. That's until you see an advertisement for an incredible new thing, a shopping mall. Cue the music. The Happydale Mall provides a wide selection of 85 fine retail stores in every field and price bracket. Browse the aisles of the magnificent Macy's department store, then take the youngsters down to the courtyard for an array of fun-filled activities for the whole family. Enjoy a modern and convenient shopping experience in America's new and improved Main Street, the shopping mall.
The invention of shopping malls totally changed American life. Malls revolutionized how Americans shopped, ate, played, and connected with their communities. But if you've been to a mall lately, it might feel less like a cultural hotspot and more like a set for a zombie apocalypse movie. Because, spoiler alert, the malls that changed the shopping game in the 1950s aren't doing so hot today. Well, it's official. The doors here at the Lake Forest Mall in Gaithersburg will be closing at the end of March. Aiello tells us soon the Galleria at White Plains will close its doors for good. Westfield announcing in a statement that it will be giving up its downtown mall property and turning control over to its lenders.
But where one person sees a potentially zombie-filled wasteland, our news cameras have just returned. Oh my gosh. Empty spot over here. Bath and body works. Empty spot beside that, empty spot beside that. Others see opportunity. With the right knowledge and vision, a mall's empty storefronts and courtyards hold a world of potential. Like most retail trends, malls emerged to solve a major problem. In the 1950s, suburbanite shoppers were flush with cash and didn't have anywhere to spend it. At least until avant-garde European urban designer Victor Gruen came onto the scene and designed the first shopping mall. Gruen developed super fashionable storefronts for businesses on Fifth Avenue in Manhattan, and he wanted to create a bustling Main Street experience for suburban shoppers too. So Gruen designed what he called the indoor downtown, which integrated shopping and entertainment experiences into one giant air-conditioned building surrounded by free parking.
But Gruen's vision was about more than just good old-fashioned post-war capitalism. Gruen wanted to solve another fundamental problem faced by the suburbs. They didn't have third places. According to sociologist Ray Oldenburg, there are three types of places in modern American social life. The first is the home, where we spend time with our families and friends. The second is the workplace, where we mix it up with co-workers around the water cooler. And third places are the other spaces people go to to share ideas, build relationships, and create communities. In other words, third places are all the other spots where we relax and hang out. That's why his mall designs included features like huge courtyards where shoppers could enjoy trees, picnics, sculptures, carnivals, cafes, and even an assortment of birds in bird cages. Malls quickly became the biggest and most popular third place in America. During the late 70s and early 80s, shopping complexes popped up at a rate of a thousand per year. And in 1992, the mall leveled up again with the opening of America's first mega mall, the Mall of America. There's a place for fun and good life, the Mall of America. Spanning over 5 million square feet, the Mall of America included over 500 stores, a theme park with 27 rides, an aquarium, a movie theater, and even a wedding chapel. Because mega malls were so attraction-filled, they were hugely profitable. In fact, consumers were 50% more likely to make purchases at malls that provided a combo of retail stores and activities.
But with mega malls, we flew too close to the sun. By the late 1990s, shoppers abandoned department stores in pursuit of new retail trends, which meant many department stores closed their mall storefronts. Without department stores as an anchor, other retailers got less traffic, and their stores started dropping like flies. And that was the fate of the enormous Cinderella City Mall in Englewood, Colorado. The mall opened in 1968 and was the largest mall west of the Mississippi, with three stories of stores, services, and restaurants. It even had a handcrafted Italian carousel. But in the 1980s, competition and an economic downturn hit the mall hard, causing several anchor stores to close. And by 1995, the Cinderella City Mall was virtually deserted by tenants and shoppers. Unfortunately, this pattern repeated in malls all over the U.S., and the decline went into overdrive once e-commerce hit the scene. Online retail allowed retailers to offer wider selections, lower prices, and a more convenient shopping experience with less overhead. With the rise of online shopping, brands that once relied on malls could sell directly to consumers, and that freaked brick-and-mortar retailers out. Many department store chains responded by over-investing in store expansion and under-investing in merchandise differentiation and e-commerce strategies, which was a major mistake. And just when it seemed like things couldn't get any worse for malls, they did. During the Great Recession of 2008, there were 441 retail bankruptcies. The coronavirus pandemic accelerated the online shopping trend. Suddenly, we all had to decorate home offices, find new hobbies, DIY our workout routines, and invest in athleisure, like so much athleisure. Our two-day shipping craze caused the vacancy rate for regional malls to spike by 0.9% in the first quarter of 2021, marking the largest increase in mall vacancies on record. Additionally, retail forecasters predicted that one-third of all malls would close their doors permanently.
With those numbers, it might seem like malls have one foot in the grave, and that online shopping is the final nail in the coffin. But let's pump the brakes. While retail trends are shifting, the total number of malls in the U.S. has stayed consistent over the past three years. And while we love online shopping, humans still need the type of third place that malls provide. Third places might be even more important post-pandemic, when we're all trying to re-emerge and reconnect with one another. Even if none of us know how to dress in public anymore. There's a huge opportunity here for savvy businesses and retailers who want to capitalize on what malls could offer. And that means tapping into everyone's basic human need for third places. Remember the original mall designer Victor Gruen? When Gruen came up with his master plan for the Southdale Mall, retail was only one part of his vision. What he really wanted to develop was a mixed-use, pedestrian-centric third place, complete with residential housing, schools, medical centers, parks, offices, and shopping, of course. Gruen thought retail was the anchor for all kinds of amazing social activities that would connect people and build communities. The good news is that we can still transform malls into the thriving social spaces they were meant to be. And actually, that's already happening around the United States. Take the Crosstown Concourse in Memphis, Tennessee. Crosstown Concourse is a vertical urban village featuring retail space, theaters, offices, health providers, a YMCA, schools, restaurants, and 265 apartments. It's a place to live, eat, learn, and connect. And Crosstown Concourse isn't new construction. It's actually a repurposed Sears mail-order distribution center. Instead of seeing failing mall infrastructure, developers seized an opportunity to turn the space into a bustling community where businesses and people thrive. The Cinderella City Mall's wish might be coming true, too. The failed mall has been redeveloped as Englewood City Center, a walkable community space complete with residential units, retail shops, offices, and an art museum. So instead of abandoning malls, retailers can use their brick-and-mortar stores to participate in community spaces, just like Victor Gruen envisioned. Repurposing malls to meet social goals gives retailers a chance to make their brick-and-mortar experience a crucial link in a strong community network. In the process, retailers can become the heart of America's re-emerging post-pandemic third place. And when we can connect with our communities, it's good for everyone.
We're learning important lessons by transforming malls. The seismic economic shifts of the past few years have impacted all sorts of businesses. And it turns out that malls might save more than just themselves. They're providing a blueprint for other struggling industries so they can tap into the power of third place, too. For example, movie theaters are leaning into the third place idea, especially since movie attendance is down a whopping 50% since COVID hit. Theaters are becoming places where people can come for a movie and then hang out at integrated arcades, cafes, sports bars, and even bowling alleys. Some movie theaters are even offering niche programming that gives customers a hyper-local, sentimental experience, like Warehouse Cinema's pajamas and free popcorn program, or Alamo Drafthouse's Team Up with the Lincoln Zoo for an outdoor screening of The Lion King. Whether it's making a mall or theater more community-centric, the real magic happens when businesses create space for people to make meaningful connections. We want to feel like we belong somewhere. And when we feel like we're a part of a real community, we'll keep coming back for more. If you could put anything in a mall, what would it be? Let us know in the comments.