Half of America’s malls disappeared over the past two decades—but the ones that survived may be stronger investments than ever.
We hear it constantly: “Malls are dead.”
It comes up in nearly every conversation the RockStep Capital team has with prospective investors. Sometimes it’s a genuine question. More often, it’s a statement disguised as one. The person has already made up their mind.
Amazon killed the mall. Everyone shops online now. Why would anyone put capital into a dying asset class?
Here’s the thing: they’re half right.
A lot of malls did close. But the conclusion many people draw from that fact is often wrong, and it can cause them to overlook a real investment opportunity.
How Many U.S. Enclosed Malls Have Closed?
Let’s begin with some notable statistics. At its peak in the mid-2000s, the U.S. had approximately 1,500 enclosed malls. Currently, depending on which data you refer to (our team closely monitors Green Street and Coresight Research), that number has decreased to between 700 and 800. This means that nearly half of America's enclosed malls have disappeared, indicating a significant contraction in the sector. We won’t downplay the impact of this change.
But here's where the narrative falls apart: people treat "malls" as a single category. They're not. They never were.
Why Many Class C and Class D Malls Failed
The malls that closed were primarily Class C and Class D properties. These malls were constructed during the construction boom of the 1970s and 1980s, a time when developers rushed to build a mall in nearly every suburb and exurb. Many of these locations were in markets that simply couldn't support them. In some areas, there were three or four malls competing for the same customer base, making the long-term viability of these properties unsustainable.
Many malls were overleveraged, with owners accumulating significant debt during the easy-money years leading up to 2008. When the financial crisis hit, weaker properties couldn't meet their loan obligations. Anchor tenants like Sears, JCPenney, and Macy's closed stores for reasons unrelated to the malls, triggering co-tenancy clauses that allowed inline tenants to renegotiate leases or walk away.
It was a cascading failure concentrated in a specific tier of properties. The malls that closed were, by and large, the malls that should never have been built in the first place. Oversupplied markets. Weak demographics. Deferred maintenance. Commodity retail with no differentiation.
We don't mourn those malls. Neither should you.
Why Surviving Enclosed Malls Are Performing Better Today
The surviving 700 to 800 enclosed malls in the U.S. constitute a fundamentally different asset base than that which existed in 2005.
Think of it as a Darwinian filter. What made it through is stronger, better-located, and better-capitalized.
Average occupancy for Class B and above surviving malls is running in the mid-to-high 80s percent. That number has actually ticked up over the past several years, which surprises people. Sales per square foot at performing malls have been rising. Green Street's data on mall NOI growth for non-distressed properties has been positive. Not explosive, but steady and positive.
Read that again: net operating income is growing at the malls that survived.
This is not what a "dying" asset class looks like. Dying asset classes don't produce rising occupancy and growing NOI. What this looks like is an industry that went through a brutal culling and came out leaner.
E-Commerce vs Physical Retail: Are Malls Still Relevant?
"But what about e-commerce?" This is a valid question.
According to the Census Bureau, e-commerce accounts for approximately 15 to 16 percent of total retail sales in the U.S. While this figure has been increasing, the growth has been slower than many people expect. The majority of retail sales still occur in physical stores. This is not a prediction or a wish; it reflects the current data.
More importantly, the relationship between online and offline retail is more complicated than "one replaces the other." We see this in our own properties. Tenants often utilize mall locations as fulfillment hubs, return centers, and showrooms.
Brands like Warby Parker and Allbirds, which began online, have opened physical stores in malls, recognizing that physical locations drive customer acquisition in ways digital advertising cannot fully replicate.
How Tenant Mix Has Adapted To E-Commerce
Does e-commerce put pressure on certain categories? Absolutely.
Commodity apparel, books, electronics: those categories have shifted meaningfully online. But experiential retail, food and beverage, health and wellness, entertainment, and services have filled the gap.
The tenant mix at a well-run mall in 2026 looks nothing like it did in 2006. It's heavier on restaurants, fitness concepts, medical offices, and entertainment. These are categories that require in-person presence, making them resistant to e-commerce disruption.
The Mall Investment Opportunity Created by Perception
Public perception of malls is still influenced by the "Death of the Mall" narrative from 2010-2018, which is no longer accurate. This outdated view affects market value, leading to lower prices compared to other commercial real estate categories.
Many institutional investors maintain a blanket "no malls" policy based on assumptions from 2015-2016, without reassessing the current landscape. This avoidance creates mispriced assets, as those who do invest in malls face less competition and better pricing.
While not every mall is a good investment and selectivity is crucial, the overall dismissal of enclosed malls as an asset class does not align with current operating data.
Key Data on Enclosed Mall Supply, Occupancy, and NOI
Let's put a finer point on the data:
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Supply: Down roughly 50% from peak. No new enclosed malls have been built since the mid-2000s. American Dream in New Jersey opened in 2019 after literal decades of delays and false starts, and it's more of a mega-entertainment complex than a traditional mall. Nobody is rushing to replicate it.
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Occupancy: Mid-to-high 80s percent for Class B+ properties, and stable to improving.
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NOI: Growing for non-distressed properties. Not every year for every mall, but the trend line is positive.
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Sales per square foot: Rising at performing properties, which tells you tenant health is solid.
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New competition: Essentially zero. No one is building new enclosed retail.
When supply shrinks and new supply is almost impossible to add, surviving properties benefit from reduced competition, whether they do anything special or not.
Why Enclosed Mall Trends Matter to Real Estate Investors
For investors evaluating retail real estate opportunities, the enclosed-mall story is less about headlines and more about supply-and-demand dynamics.
Over the past two decades:
- The number of enclosed malls has dropped dramatically
- New development has nearly stopped
- Surviving properties have adapted their tenant mix
- Operating metrics for many stabilized malls have improved
When supply decreases while demand remains relatively stable, the remaining assets often become more valuable within their trade areas. That does not mean every mall is a strong investment. Market demographics, tenant quality, property management, and capital investment all still matter.
But understanding how the sector has evolved allows investors to evaluate opportunities based on current conditions rather than outdated narratives.
Why Developers Are Not Building New Enclosed Malls
The final piece of this discussion involves supply.
No meaningful number of new enclosed malls have been built in the United States since the mid-2000s. The American Dream complex in New Jersey opened in 2019 after decades of delays and redevelopment challenges, and it functions more as a mega-entertainment destination than a traditional mall.
Today, building a new enclosed mall has become extremely difficult. Financing, zoning, land requirements, and development economics all play a role. Interestingly, that difficulty can benefit existing malls.
We’ll dig into the supply side of the equation in our next piece. The short version is this: the reason developers aren't building new enclosed malls isn’t simply that they are poor investments.
In many cases, it’s because building one has become extraordinarily difficult. And that reality has important implications for existing malls.
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