Malls are making a shocking comeback — becoming the top performer in commercial real estate

Zombie malls are having the last laugh.

After a decade of doom-loop headlines, Instagram-video obituaries and dead-mall photo essays, America’s shopping centers just posted the hottest numbers in commercial real estate.

Mall values shot up 13% in the past year, according to real-estate research firm Green Street, crushing every other property sector and doubling the pace of the broader commercial market’s recovery.

The comeback isn’t just Wall Street math. It’s Gen Z dragging their moms to the food court, luxury brands moving into old Sears boxes and landlords finally figuring out that a mall without a movie theater or a Din Tai Fung is just a warehouse with parking.

“In terms of how we think about the malls today fundamentally, this is probably the best it’s felt post-COVID,” Ronald Kamdem, who heads US REIT and commercial real-estate research at Morgan Stanley, told the Wall Street Journal.

It’s a wild reversal from five years ago, when lockdowns gutted foot traffic and department-store closures were already bleeding malls dry.

Roughly 200 malls have shuttered nationwide since 2008, Green Street data shows, leaving about 900 still standing.

And the survivors left standing aren’t just surviving, they’re becoming tourist attractions in their own right. As for the top five, based on foot-traffic alone, they’re booming.

Minnesota’s Mall of America pulls in a jaw-dropping 40 million visitors a year to browse its 500-plus stores and 50-plus restaurants. New Jersey’s American Dream matches that same 40-million-visitor number thanks to an indoor ski slope and DreamWorks Water Park, one of the largest indoor water parks in North America, alongside more than 300 retail stores.

Houston’s the Galleria draws upward of 30 million shoppers a year, many of them lured by its center-court ice skating rink and more than 400 stores. Pennsylvania’s King of Prussia Mall, home to one of the country’s deepest luxury retail lineups across 450-plus stores, pulls about 25 million visitors annually. And South Florida’s Aventura Mall rounds out the top five with roughly 25 to 28 million annual visitors browsing its 300-plus stores.

Simon Property Group, the mall king of America, is riding the wave straight to the bank. Its stock blew past its old 2016 record high in July and has outpaced the S&P 500 over the last year.

Even landlords who swore off American malls are crawling back. Unibail-Rodamco-Westfield ditched plans to exit the US market just four years ago. Now it’s spending close to $1 billion this year to buy out partners and take full control of Westfield UTC in San Diego and Westfield Southcenter near Seattle.

“We see the type of rent growth that we haven’t seen since the beginning of the 2010s,” URW chief executive Vincent Rouget told the Journal.

Rouget said the American portfolio is now outgrowing the rest of the company’s holdings worldwide, with tenant sales and income climbing faster than average even after URW sold off a slew of underperforming properties in recent years.

It’s not just the trophy properties cashing in either. Chattanooga-based CBL Properties spent a year in bankruptcy after the pandemic hit and has since clawed its way back, shedding more than two dozen weaker malls since 2013 while snapping up five new ones since last July. Its stock has climbed 48% since January.

“It’s really been, I think, even better than we had hoped,” CBL chief executive Stephen Lebovitz added.

And it turns out the kids never left. At Tysons Corner Center in Virginia, shopper Heather Eilers-Bowser watched her 13-year-old daughter hunt down sweatpants from the online-famous brand Edikted while she picked out sneakers for her husband and son.

“She has more expensive makeup than I do,” Eilers-Bowser said of her daughter. “And a lot more.”

Not everyone is buying the hype. Bob Neighoff, a portfolio manager at Mariner Investment Group, thinks the sector’s newfound swagger has a shelf life, especially since so many malls filled their empty anchor spaces with restaurants and entertainment venues that would be brutal to replace if they ever went under.

“Unlocking the dirt is the true value of the mall,” Neighoff told the Journal. “I’m a little more cautious on the actual retail experience of the mall being something to hang your hat on.”

Still, CBL’s West County Center outside St. Louis shows just how far the turnaround has come. Back in 2022, the 1.2 million-square-foot mall couldn’t even refinance its debt as lenders fled midtier malls. Values there had sunk 30% over the prior decade, three of four prime restaurant spaces sat empty and a rival mall was stealing shoppers from anchor tenant Nordstrom.

Fast forward to today and Nordstrom’s old rival location has closed, Macy’s has renovated, and Cheesecake Factory and Urban Outfitters are both moving in later this year. Tenant sales at the property are up 13% since 2023, and Lebovitz says he expects to close on a refinancing within 60 days.

“We’ve just seen this real strengthening of the property,” he said.