08 April 2008

Dead malls: why do they exist?

Some of the more observant of you may have noticed my interest in so-called 'dead' malls, listed on the bar to the right. But you ask, "What is a 'dead' mall?" Allow me to explain.

Certainly many of you may know of an enclosed shopping mall or two in your metropolitan area which does not meet the standards that you would expect to find for such a major retail destination as a shopping mall. These malls may have vacant anchor spaces; or high inline (that is, the mall interior hallway) vacancy rates; or the occupancy may be relatively healthy but the stores offered include few well known national chains and many locally owned, 'mom and pop' type affairs or eight different kinds of urban wear stores. These malls generally don't see the levels of foot traffic that regular, crowded malls do. These are known as dead malls. There is a rather large interest base out there which studies the phenomenon, and there are several websites currently dedicated to the subject.

So we know what they are, but the question you may have is "How can that be? How can a mall 'die'? They're too big to fail." Ah, but that is the great American conceit, "too big to fail." Nothing is too big to fail. Just ask the stockholders of Bear Stearns.

In any case, malls are commercial ventures and like all commercial ventures in this fiat money regime, there is a risk of either: having made an improper or unsound investment which presupposes retail demand that simply does not exist; or losing business to competitors for various reasons, and thus descending into insolvency. Most mall failures are a case of the latter, but some dead malls (especially "downtown malls") fall into the former category.

Okay, so malls fail because the market evolves and changes constantly, and consumers are fickle and will abandon one shop for another on a whim. Sounds simple, right? However, there are deeper trends working here besides this. The naysayers are, in a way, right. Malls are simply too large of an investment to be permitted to fail by their owners. They are generally quite valuable pieces of property, after all, and the owners are as interested in obtaining a profit as any other capitalist would.

And from the early days of mall construction in the 1950s through the 1980s, you never saw the commercial failure of a major enclosed shopping mall, anywhere, in the manner which has become rather common in the past decade and a half (except for one stark exception).

So what happened? Why are malls dying right and left today, after so many years of retail dominance? After all, don't people still go to malls? Isn't the mall as American as grandma and apple pie?

(Actually, no - there are shopping malls all over the globe now. But I digress.)

For one thing, the market for retail space has long been overbuilt and over-saturated, thanx to easy credit courtesy of a criminally benevolent State and the Bernanke Hi-Finanz Boyz who run the printing presses nonstop. A retail die-off is only natural, the course of a market working through a much needed correction.

Secondly, retail trends indicate that large enclosed malls have fallen out of favor with consumers - they now are supposed to prefer open air shopping centers such as strip malls. This is the reasoning by which the 'town center/lifestyle center' and 'power center' craze is being fueled. (Of course, this doesn't explain why healthy malls remain packed with shoppers, and doesn't contemplate that consumers might value climate controlled shopping far more that is currently estimated. After all, it sure beats shopping in the heat, cold, or rain, depending on the local climate.)

But I believe that something deeper is going on. And that something deeper, regrettably, is the rise of the thug, and the death of the American consumer.

As more folks, supported by an all too willing to acquiesce State, choose the thug life - the path of destitution and irresponsibility - logically their disposable income will decrease. And what little cash they have will be required for essentials such as food and illegal drugs (always essential to the thug). So they will not be spending much at the mall, except to buy some thug shoes and threads once in a while. (Ever notice how many dead and dying malls manage to retain a Foot Locker until near the end?)

Dead malls are never completely empty except at the very end of their lives. Generally there is a period where a declining center transitions from relatively healthy to second tier. This is the period when the thug element generally becomes dominant among the mall's patrons. Usually this ushers in a wave of criminal activity, which will be played up in the media and will eventually lead to the mall's final demise as a viable commercial property, and ultimately its closing.

Mall management and owners, try as they might, cannot usually save a dying mall once it is done for. Besides all the other things mentioned above, the American consumer overall is poorer today - thanks to lower real wages, inflation, increasing taxation, decreasing employment security, high personal debt levels, etc. So he cannot be counted upon to save the sinking ship. There are fewer dollars in play today, and what is available largely goes to the established, healthy, and dominant centers since American consumers are like so many lemmings, frequenting the places where everyone else goes. And the dominant centers have more shops to offer, provide more amenities, and generally anchor large and well-established retail centers centrally located in the suburbs.

The first mall ever recorded
as having succumbed to commercial failure was exterminated by the rise and reign of the superthug. It is instructive to study the fate of this mall, which remains empty, unused, and standing among the ghetto ruins of its home city, thirty years after it closed its doors for business for the final time. For this is the wave of the future - the anti-civilization, the reverse of progress, the triumph of death over life - unless this country gets its act together and exterminates superthuggery from its culture and society.