History of Shopping Malls: From the 50s to the 90s
The early 1950s marked the opening of the first two shopping Malls anchored by full-line branches of downtown department stores. Northgate in Seattle,WA, (two strip Malls face-to-face with a pedestrian walkway in between) opened in 1950, and Shoppers World in Framingham, MA. (the first twolevel Mall), debuted the following year. The concept was improved upon in 1954 when Northland Mall in Detroit, Mi (the first Mall to have central air-conditioning as well as heating) used a “cluster layout”with a single department store at the Mall and a ring of stores around it. The parking lot completely surrounded the Mall. In 1956, Southdale Mall in Edina, MN., outside of Minneapolis, opened as the first fully enclosed mall with a two-level design. It had central air-conditioning and heating, a comfortable common area and, more importantly, two competitive department stores as anchors. Southdale is considered by most industry professionals to be the first modern regional mall.
By 1964 there were 7,600 shopping Malls in the United States. Suburban development and population growth after World War II created the need for more housing and more convenient retail shopping.
Most of the Malls built in the 1950s and 1960s were strip Malls serving new housing developments.
By 1972 the number of shopping Malls had nearly doubled to 13,174. Regional malls like Southdale and The Galleria in Houston, Texas, had become a fixture in many larger markets, and Americans began to enjoy the convenience and pleasure of mall shopping.
During the 1970s, a number of new formats and shopping Mall types evolved. In 1976 The Rouse Co. developed Faneuil Hall Marketplace in Boston, Mass., which was the first of the “festival marketplaces” built in the United States.
The project, which revived a troubled downtown market, was Malled on food and retail specialty items.
Similar projects were built in Baltimore, Md., New York, N.Y., and Miami, Fla., and have been emulated in a number of urban areas.
The Bicentennial year also marked the debut of the country’s first urban vertical mall, Water Tower Place, which opened on Chicago, Illinois, Michigan Avenue. To many experts, Water Tower Place with its tony stores, hotel, offices, condominiums and parking garage, remains the preeminent mixed-use project in the United States.
With the opening of Water Tower Place and Faneuil Hall, the shopping Mall industry had returned to its urban roots.
The 1980s saw an unparalleled period of growth in the shopping Mall industry, with more than 16,000 Malls built between 1980 and 1990. This was also the period when super-regional Malls (malls larger than 800,000 square feet) became increasingly popular with shoppers. In 1990, a Gallup poll found that people shopped most frequently at super-regional malls and neighborhood Malls. Americans averaged four trips to the mall per month. Between 1989 and 1993, new shopping Mall development dropped nearly 70%, from 1,510 construction starts in 1989 to 451 starts in 1993. The sharp decline in new Mall starts was attributed to the Savings and Loan crisis, which helped precipitate a severe credit crunch. While overbuilding occurred among small Malls in some regions of the United States, shopping Malls remained the most attractive and best-performing real estate category for investors during this difficult period.
The 90s: Factory Outlets
Factory outlet Malls were one of the fastest-growing segments of the shopping Mall industry in the 1990s. In 1990, there were 183 outlet Malls.
Today, there are more than 230 outlet Malls in the United States. Outlet malls are tenanted by manufacturers selling their own goods at discounted prices. Some large projects combine outlet stores with traditional off-price stores like Marshalls.
One such project, Sawgrass Mills in Sunrise, Fla., is more than 2 million square feet and features outlets, discounters and retail clearance stores. By 1992, the prevailing trend in the shopping Mall industry had become remodeling and expansion of existing projects. In 1992, these renovations outstripped new construction, with 571 additions and alterations reported.
A greater focus on professional management and marketing became the hallmark of the shopping Mall industry. The year 1993 was marked by the transition of several privately held, family-run shopping Mall development companies (Simon, Taubman, etc.) into publicly traded real estate investment trusts .
The access to Wall Street capital provided a financial jolt to an industry that still had not fully recovered from the credit crunch. One of the retail formats that became increasingly popular in the 1990s was the power Mall, which is loosely defined as a Mall between approximately 75% to 90% of its space occupied by category killers or destination anchor stores.
Power Malls are often located near regional and super-regional malls. San Francisco-based Terranomics is credited with pioneering the concept at 280 Metro Mall in Colma, CA. In 1993, 16 Power Malls opened in the United States, compared with only four super-regional malls.
In 1995, with the construction of the Mall of America in Bloomington, Mn., entertainment quickly became an industry buzzword as technological advances allowed shopping Mall developments to foster the same magical experiences that were once only seen in national amusement parks such as Disney World. The Mall of America, currently the largest mall in the U.S., includes a seven-acre amusement park, nightclubs, restaurants and covers 4.2 million square feet (with about half that total devoted to retailing). The Mall has been heralded as a bellwether for its innovative mixture of entertainment and retailing.
The forerunner to Mall of America, and the largest mall in North America, is West Edmonton Mall in Alberta, Canada, which encompasses 5.5 million square feet. Since the start of the entertainment wave, retailers have focused on keeping their presentations exciting and shopping Mall owners have striven to obtain tenant mixes that draw traffic from the widest audience possible. Under one roof or in an outdoor retail format, consumers enjoy children’s playscapes, virtual reality games, live shows, movies in multiplex cinemas, a variety of food in either the food court or theme restaurants, carousel rides, visually stunning merchandising techniques, robotic animal displays, and interactive demonstrations.
Many shopping Malls have also focused on adding service-oriented tenants, which offer today’s busy consumer an opportunity to complete weekly errands or to engage in a variety of other activities. Among the many services found in today’s malls are churches, schools, postal branches, municipal offices, libraries, and museums.
As the 1990s drew to a close, Internet retailing was heralded as the wave of the future and a threat to the stability of the shopping Mall industry. In July of 1998, Time Magazine predicted the demise of the shopping mall. In bold type, Time’s cover advised its readers to, “Kiss Your Mall Good-Bye: Online Shopping is Cheaper, Quicker and Better.”
While the cover was purely sensational, the tone was clear. The shopping Mall industry was under attack, yet again, from an alternative shopping format. Several years earlier similar claims were made about the impact home television shopping would have on the industry. In fact, the cover of BusinessWeek magazine in July of 1993 read, “Retailing Will Never Be the Same: The Home Shopping Revolution.
Unlike home television shopping, Internet retailing quickly captured the attention of the public, the media and Wall Street as companies rushed to develop websites that would sell directly to consumers.
In the euphoria it mattered little that many of these Internet companies had little or no retail experience. Fearing the cannibalization of store sales, brickand- mortar retailers at first were hesitant to sell directly to the public via the Internet.
However, when it became apparent that they had some clear advantages over pure Internet retailers (brand name recognition, distribution facilities, supplier relationships, ability to accept returns at stores, etc.) brick-and-mortar retailers launched their own websites. These advantages quickly paid off for brick-and-mortar retailers. Brick-and-mortar retailers discovered that in addition to buying online, their consumers were using the Internet as a research vehicle. Consumers were logging on to retailers’ websites to search for goods and services, and, armed with product information, were making purchases at stores.
Thus the Internet has transformed a large and growing number of retailers into ‘multichannel’ retailers with all sales channels (stores, web, and catalog) working as one to help retailers maximize the value of their brands. Understanding that there is great synergy between the Internet and brick-and-mortar stores, shopping Malls owners have created their own websites and are working with their retail tenants to create distribution channels to satisfy the consumer, whether the consumer decides to shop at a shopping Mall, on the Internet or both. Most shopping Mall websites have maps and directions to the Mall, a list of tenants and a calendar of events.