DEATH OF THE "SHOPPING MALL" IN AMERICA-TOO MANY OR JUST A FIGMENT OF THE PAST? MEMORIES OF MY FIRST MALL VISIT IN 1968

I remember the day of the opening of the first ENCLOSED SHOPPING MALL and the largest in America as it opened in 1968 in Lombard, IL: YORKTOWN CENTER. What a fantastic creation it was, and the traffic to get there required police to direct it as well, as no less than an hour or two to wait to get there due to the inability of the local roads to accommodate the traffic.

I was just 16 later that year, and a friend who was slightly older had an actual working car that he purchased for $300 and drove us all there every Friday night to see the fantasy world of 180 different stores on no less than two levels, and lot's of girls who wanted to shop there incessantly.

It was a chick magnet but also a place to be able to buy anything at one location in the air conditioned comfort of 72 temperature year round. It was very much like those teenager high school movies with kids hanging out at the MALL and then going to the movies.

On it's perimeter was also a movie theater complex as well, with something new MULTIPLE SCREENS at one place, wow, what an invention!

This mall was so popular from its first day that imitators quickly sprang up and it was no loner the largest soon, but still retained its popularity as its surrounding area grew in population and surrounding stores expanded its retail offerings.

The mall had stores that existed only back then and over the years became a casualty of the retail closings: WIEBOLT STORES was an anchor, and a Chicago fixture since 1907; MONTGOMERY WARDS, a national chain based in Chicago, MADIGANS, similar to the Kohl's business model (the Kohl's stores were started from a chain just outside the mall called MAIN STREET); HERMANS WORLD OF SPORTING GOODS, a gigantic chain of sporting goods stores, and CHARLES A. STEVENS which advertised "whare the models buy their clothes".

What memories...

Now the Mall has gone through several remodelings and reburbishments, and the WIEBOLDT STORE was vacant for 7 years, being remodeled into the largest VON MAUR department store in the country. Von Maur is a great old line and old fashioned service specialty department store chain, that remionds you of the good old days of merchandising. The others now long gone were converted into expanded food courts, etc.

Now the statistics are showing the the MALL shopping experience is on a decline with so many big box stores drawing traffic from them, and typically being discounters, drawing away from the retail margins experienced by the mall stores.

Withe the proliferation of local shopping centers, high fule prices and less time to shop, consumers are changing their shopping destinations just enough to change the landscape of the MALL SHOPPING EXPERIENCE.

Personally, I miss that experience, and long for the good old days.
Malls, those ubiquitous shopping meccas that sprang up in the 1950s, are dwindling in number, with many struggling properties reduced to largely vacant shells.

On the low-income east side of Charlotte, N.C., the 1.1-million-square-foot Eastland Mall recently lost a slew of key tenants, including a Dillard's and, next month, a Sears. Sales per square foot at the venue fell to $210 in 2008 from $288 in 2001.

Death of an American Mall

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Andy McMillan for The Wall Street Journal

As the recession alters American spending habits, traditional shopping malls like Eastland Mall are deteriorating at an accelerating pace.

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The Metcalf South Shopping Center in Overland Park, Kan., is languishing after plans to redevelop it into an open-air shopping district fizzled. The stretch of shops that connects the two largest tenants -- a Sears and a Macy's -- stands mostly vacant, patrolled by security guards.

With their maze of walkways and fast-food courts, malls have long been an iconic, if sometimes unsightly, presence in the American retail landscape. A few were made famous by their sheer size, others for the range of shopping and social diversions they provided.

But the long recession is helping to empty out the promenades. Some analysts estimate that the number of so-called "dead malls" -- centers debilitated by anemic sales and high vacancy rates -- will swell to more than 100 by the end of this year.

In the 12 months ended March 31, U.S. malls collectively posted a 6.5% decline in tenants' same-store sales, according to Green Street Advisors Inc., a real-estate research firm. The recent slump was led by an average 7.3% sales drop at Simon Property Group Inc., the operator with the largest number of mall locations.

The industry's woes are worsening. Thinning customer traffic, and subsequent hits to tenants' sales and profits, prompted Standard & Poor's Corp. last month to lower the credit ratings of the department-store sector. That knocked Macy's Inc. and J.C. Penney Co. into junk territory and pushed others deeper into junk. Sears Holdings Corp., a cornerstone tenant at many malls, is expected to close 23 stores this month and next.

General Growth Properties, which owns more than 200 U.S. malls, filed for bankruptcy protection April 16, due mainly to its failure to refinance billions of dollars of debt coming due. While the real-estate investment trust has said the filing will have no impact on its mall business, analysts say a prolonged bankruptcy proceeding could make retailers nervous about sticking around once their leases expire.

The severity of the recession is turning some malls that were once viewed as viable into potential casualties. "Any mall that's sitting on life support is probably going to get its plug pulled" as the economy stalls, says Michael Glimcher, chairman and CEO of Glimcher Realty Trust, which owns 23 U.S. properties, including Eastland Mall in Charlotte.

See 84 malls in danger of closing.

How the U.S. Got Malled

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Look back at the American mall's rise to prominence and recent woes.

One industry rule of thumb holds that any large, enclosed mall generating sales per square foot of $250 or less -- the U.S. average is $381 -- is in danger of failure. By that measure, Eastland is one of 84 dead malls in a 1,032-mall database compiled by Green Street. (The database focuses heavily on malls owned by publicly traded landlords and doesn't account for several dozen failing malls in private hands.) If retail sales continue to decline at current rates, the dead-mall roster could exceed 100 properties by the end of this year, according to Green Street. That's up from an estimated 40 failing malls in 2006, before the recession began.

"This time around, because of the dramatic changes in consumer spending practices, we're very likely to see more malls in the death spiral than we've ever seen before," says Green Street analyst Jim Sullivan.

Failing malls didn't get into trouble overnight, and most began their descent long before the tough climate. Typically, a mall begins to suffer due to job losses and other pressures in the surrounding neighborhood or because a newer mall opens nearby. The loss of key tenants -- such as the wave of department-store closures over the past three years -- hastens the demise. Also sapping malls' vibrancy: the increased preference among consumers for big-box stores, such as Wal-Mart Stores Inc. and Target Corp., which rarely operate in malls.

Developers, in fact, have been moving away from the enclosed-mall format in favor of big-box centers anchored by free-standing giants such as Wal-Mart or open-air shopping centers with tiny parks and outdoor cafes sprinkled among fashion stores. Only one enclosed mall has opened in the U.S. since 2006: The Mall at Turtle Creek in Jonesboro, Ark.

These pressures, coupled with landlords' difficulties refinancing debts in the bone-dry capital markets, signal tough years ahead for retail-property owners -- even after consumer spending begins to rebound. "The shopping-center bankruptcies and the REIT bankruptcies are the ticking time bomb that people aren't talking about," says Burt P. Flickinger III, managing director of Strategic Resource Group, a research firm.

Four months ago, executives at J.C. Penney headquarters in Plano, Texas, called a "triage" meeting to discuss a recent study of the financial condition and health of the 550 malls housing Penney stores. The study's conclusion: 15 of its stores are located in malls at risk of failure.

"We started to see things heading south," says Penney CEO Myron "Mike" Ullman III. It was important, he notes, to "get ahead of this" mall problem by reviewing Penney's new store strategy to determine whether it might relocate existing mall stores. Over the past 18 months, Penney's weekly sales have been trending better at stand-alone stores that aren't attached to traditional malls.

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Faison Enterprises Inc.

Shoppers watched ice skaters on the central ice rink of Eastland Mall when the Charlotte mall opened in 1975. The ice rink closed last year, along with several of Eastland's stores.

Hundreds of other anchor stores -- generally two- and three-story department stores that drive mall momentum -- are pulling out of properties. Several anchor chains, including Gottschalks Inc., Goody's Family Clothing Inc. and Boscov's Department Store LLC, filed for bankruptcy protection in recent months. Goody's ended up liquidating its 282 stores, as Gottschalks is now doing with its 58. Boscov's closed 10 locations. As mall-based chains face the prospect of a much smaller market, more closures are likely. So far for 2009, monthly sales declines at upscale retailers such as Saks Inc., Nordstrom Inc. and Neiman Marcus Group have registered mostly in the double digits, compared with results a year ago.

Saks CEO Stephen Sadove is talking with mall owners about closing a few of the retailer's 53 Saks Fifth Avenue stores. "You have to ask yourself: Do you believe the prospects for a given store or mall are going to be positive? Can you make money over the long term?" he says.

For towns and cities that are home to dying malls, the fallout can be devastating. Malls hire hundreds of workers and are significant contributors to the local tax base. In suburbs and small towns, malls often are the only major public spaces and the safest venues for teenagers to shop, hang out and seek part-time work.

Commonly, "the mall will be a meeting place, or, in some cases, like a city center," says Carl Steidtmann, chief economist at Deloitte LLP. The deterioration of a mall can spawn broader problems, he notes. "It can become a crime magnet."

The gradual fade-out of marginal malls has prompted a thriving Web culture dedicated to sharing information about dead or dying properties. Sites such as Flickr.com, Deadmalls.com and Labelscar.com are drawing traffic from mall employees, shoppers and other mall mourners who swap stories, photos and predictions about the status of centers on their way out.

"So sad!" wrote Edith Schilla, 45 years old, of Independence, Ohio, in an April 3 posting on Labelscar.com following her visit to a Sears liquidation sale at the Randall Park Mall in North Randall, Ohio. "I was able to peek into the mall and was so overtaken by the vast emptiness," she wrote, recalling it as previously "so busy."

After the Sears closes next month, Randall Park will be left with only a few remaining tenants, including an Ohio Technical College automotive school. It currently has the most popular page on Labelscar.com, which so far this year has a 25% increase in postings on its "dead malls" category. Mall owner Whichard Real Estate LLC is trying to sell the property, which likely needs to be torn down and rebuilt into something else, says Whichard asset manager Kenneth Whichard. Local officials, meanwhile, want to fill the mall with education and industrial tenants.

During past economic cycles, dead malls were frequently redeveloped into mixed-use space that includes apartments, offices or parks. Repurposing mall space today will be more difficult. Lenders and investors are moving away from commercial real estate as property values decline and delinquencies rise on debt used to acquire or develop properties. Retail real estate has been hit especially hard, as declining retail sales and store closures hammer mall landlords.

In Charlotte, Eastland's deterioration into a dead mall matches the fate of many others across the U.S.

Faison Enterprises Inc. opened Eastland in 1975 as the city's second regional mall. Shoppers crowded four-deep around its skating rink to see local dignitaries kneel gingerly on the ice as a Presbyterian minister blessed the structure with prayers. In the early years, shoppers flocked to the mall's Miller & Rhoads and Ivey's department stores, among others.

"It was just a great place to go and be seen," said Mary Kate Cline, a 51-year-old who frequented the mall in its early years but can't recall the last time she entered it.

Eastland's reign lasted roughly two decades. Its market began to erode when the area around Eastland fostered low-income housing. Meanwhile, the Charlotte area's more affluent residents and new arrivals gravitated to suburbs on the city's north and south ends. Developers built and renovated malls in those suburbs, drawing shoppers away from Eastland. In recent years, discount stores such as Wal-Mart and midtier Kohl's Corp. sprung up near Eastland, siphoning off more of its shoppers.

A string of major store exits at Eastland began with Penney's departure in 2002. Belk Inc. closed in 2007, along with several national specialty stores. The closures gained momentum amid the recession last year, when stores including New York & Co., Genesco Inc.'s Journeys, Finish Line Inc. and Dillard's Inc. pulled out, leaving behind empty, gated storefronts.

A handful of retail holdouts -- stores for Footlocker Inc., Burlington Coat Factory Inc. and several local merchants, many paying reduced rents -- are reluctant to leave, even as sales dwindle. "I've made my business here," Luz Pavas said, while manning her kiosk of health and beauty aids. "I don't want to move to another mall. I want Eastland Mall to be like it was eight years ago."

Boarded-up stores near the mall languish as reminders of departed retailers, including Mega Food Market, Uptons department store and Harris Teeter Inc. Neighbors and community leaders want Eastland razed and replaced with developments such as upscale housing to attract a new demographic.

But the mall's current owner, Glimcher Realty Trust, the Columbus, Ohio-based owner of 23 malls, is keen to sell Eastland rather than spend the hefty sums needed to redevelop it. A better investment, says the company, "would be to put money into assets that were doing well," according to Glimcher spokeswoman Lisa Indest.

Charlotte city officials have lined up resources to help reinvent the mall, including $20 million in public financing. They acknowledge that finding a developer willing to underwrite the additional $180 million needed to turn Eastland into a mix of housing, shops and parks will be tough.

"No one's kidding themselves that this is an easy real-estate deal," says Charlotte City Councilman John Lassiter. "It wasn't easy when the market was good. Now it's much harder."