On Reddit, user Dull_Entry_8287 writes:

The mall didn't die because of Amazon. It died because of a lease clause. And mid-size towns got screwed twice.

Everyone has the story wrong.

Ask people why malls died and you get the same three answers: Amazon, COVID, and "people just stopped going." Those things all happened. But a lot of our local malls closed in the 1990s. Amazon was a bookstore. COVID was thirty years away. Something else killed them first.

Here's what actually happened, and why the nostalgia you feel for your mid-size town's mall is about something more than the Auntie Anne's pretzel smell.

The numbers don't match the story

The U.S. had roughly 25,000 malls of all sizes in 1986. From that year through 2017, they closed at a rate of 764 per year. The enclosed mall peaked in the mid-1990s, right around the time your town's mall probably started looking a little rough, and then the tide turned. The retail apocalypse narrative of the 2010s was the obituary, not the cause of death.

In 1990, department stores accounted for 14.5% of all U.S. retail sales. By 2024 that share had fallen below 1.8%. The freefall started in 1990. The internet went mainstream in the mid-2000s.

The receipt problem

Here's the thing almost nobody talks about. Mall leases were structured differently from every other commercial real estate deal in America. In addition to base rent, mall tenants were required to pay a percentage of their gross sales to the landlord, typically around 6%, sometimes more. The landlord had the right to audit your books. You had to hand over your receipts. The more you sold, the more you paid.

No other commercial landlord in America worked this way. The guy who owned the strip mall down the highway just wanted his fixed rent check on the first of the month. He didn't care if you had a good October. The big box developer who built the Walmart on the bypass wanted a flat lease, nothing more. No revenue share. No audit rights. No one looking at your receipts.

And retailers noticed.

Why Target and Walmart built boxes instead of moving in

Walmart, Target, Home Depot, Best Buy — the retailers that thrived through the 1990s and 2000s — almost universally chose freestanding buildings over mall locations. They were called "category killers" partly because of what they did to mall anchor stores, but also because of how they operated: purpose-built boxes, fixed rent, total control of their own space and hours.

If the mall owners had seen it coming, the fix was obvious. Drop the percentage rent requirement for the big box retailers, charge enough flat rent to cover the Easter Bunny and the food court fountain maintenance, and compete for the tenants who were walking out the door. Target wasn't asking for a sweetheart deal. They just wanted to pay for the space and keep what they earned. The mall owners had MBAs. They had real estate lawyers. Somewhere in there, someone should have run the math on what it would cost to keep a Target inside versus what it would cost to lose one to the bypass. They didn't, or if they did, the percentage rent model was too baked into their financing structures to change. Either way, Target built a box down the road and the mall started dying.

What the malls never grasped, or refused to accept, is that the percentage rent model made sense when the mall itself was the scarce resource. In the 1960s and 1970s, if you wanted to reach suburban shoppers, you had to be in the mall. The landlord had real leverage. Taking a cut of revenue was justifiable because the mall was genuinely creating value you couldn't replicate anywhere else.

By the 1990s that was no longer true. The highway bypass had cheap land. Big box developers were ready to build. And they didn't ask for your receipts.

There's actually a third layer to this, and it's pretty wild

Malcolm Gladwell wrote about this in a 2004 New Yorker piece called "The Terrazzo Jungle" (free to read here: https://www.yumpu.com/en/document/view/4327827/the-terrazzo-jungle-malcolm-gladwell), drawing on historian Thomas Hanchett's research. In 1954, Congress accidentally supercharged mall construction by passing an accelerated depreciation law intended for factories that ended up applying to any income-producing building. Suddenly developers could take enormous tax-free deductions on new mall construction, making a new mall more profitable than buying stocks, even if the mall itself wasn't doing that well.

So malls got built everywhere, including markets that genuinely couldn't support them, because the financial incentive was the tax shelter, not the retail performance. And once you've taken your depreciation, you have very little motivation to modernize the property. The math on when those 1950s, 60s, and 70s-era malls would start aging out of their owners' interest lands squarely in the mid-1990s through about 2015. Which is exactly when the dead malls started piling up.

The owners weren't saving the mall. They were milking the depreciation clock.

What this meant for mid-size towns

The Buckle was never going to open a freestanding location in a city of 40,000 people. Neither was Waldenbooks, or Foot Locker, or Sam Goody, or any of the other stores that made a mall trip feel like access to something bigger than your town. The percentage rent model, for all its extractiveness, was also the thing that made it financially viable to bring those stores to mid-size markets. The developer could afford to take a risk on a secondary market because they'd participate in the upside if it worked.

When big box developers came along with flat-rent strip development, that math changed. Retailers followed the economics, not the geography. They went to the highway bypass. Mid-size towns ended up with a Walmart, a dying mall, and eventually nothing in between.

The cruelest part is that most of those downtowns were already hollowed out. The mall had spent twenty years pulling retail gravity away from Main Street, and then the mall died too. A handful of cities have managed to bring their downtowns back through sustained civic effort, dedicated planning, and in some lucky cases a major private investment. But that's not a formula you can replicate. A few cities got lightning. Most didn't.

The mall never required any of that. It just needed a parking lot and enough car-owning people within 20 miles.

So what is the nostalgia actually about?

It's not about the mall as a retail format. It's about the fact that for mid-size cities, the mall was the only real third place that wasn't a bar or a church, a climate-controlled semi-public space where you could run into people, where teenagers could exist without buying anything, where a family could spend two hours on a Saturday without a plan.

The strip of big boxes on the bypass doesn't do that. You can't accidentally run into someone at Walmart. There's no food court. There's no anchor store that makes the whole trip feel like an event.

The mall died because a leasing model got underbid by competitors who were willing to just charge for the box. The places that lost the most weren't the big cities that could absorb it. They were the mid-size towns that got the national retail once, briefly, imperfectly, and then watched it leave.

The nostalgia isn't for the mall. It's for the access.

I don't know if Arnot Mall did a percentage of income or not; I don't believe they did when I worked there but I guess it's possible they did in the past. Either way, it's an interesting take on why shopping malls have died out.

It makes perfect sense if you own a business to build your own place rather than pay exorbiant leases and fees. Just look at Consumer Square.

7 minutes ago, Chris said:

I don't know if Arnot Mall did a percentage of income or not; I don't believe they did when I worked there but I guess it's possible they did in the past. Either way, it's an interesting take on why shopping malls have died out.

It makes perfect sense if you own a business to build your own place rather than pay exorbiant leases and fees. Just look at Consumer Square.

They did. Several folks I know moved out because of it.

On 5/17/2026 at 8:55 AM, Elmira Telegram said:

And once you've taken your depreciation, you have very little motivation to modernize the property. The math on when those 1950s, 60s, and 70s-era malls would start aging out of their owners' interest lands squarely in the mid-1990s through about 2015. Which is exactly when the dead malls started piling up.

The owners weren't saving the mall. They were milking the depreciation clock.

I was unaware of the depreciation incentive. It sheds some light on some of the root causes of the issue I've mentioned before for declining malls. The lack of motivation for maintenance, upkeep and improvements folds in with the decline in investing in the "community gathering" space he talks about (that drove traffic to the retail businesses):

On 5/17/2026 at 8:55 AM, Elmira Telegram said:

It's not about the mall as a retail format. It's about the fact that for mid-size cities, the mall was the only real third place that wasn't a bar or a church, a climate-controlled semi-public space where you could run into people, where teenagers could exist without buying anything, where a family could spend two hours on a Saturday without a plan.

The strip of big boxes on the bypass doesn't do that. You can't accidentally run into someone at Walmart. There's no food court. There's no anchor store that makes the whole trip feel like an event.

The strip of box stores also doesn't have the community events (pageants, shows, art exhibits, etc) that malls had. The retailers had no reason to keep paying the premium mall rents once malls stopped providing all the events that drew traffic.

Edited May 18May 18 by MsKreed

I can come up with at least a half dozen ideas for an event to hold at the mall that would attract people there. I’m sure as a group we could come up with dozens.

Yet someone making good money to do just that can’t. As I’ve said elsewhere on here, it just takes some imagination, some vision.

18 minutes ago, Chris said:

I can come up with at least a half dozen ideas for an event to hold at the mall that would attract people there. I’m sure as a group we could come up with dozens.

Yet someone making good money to do just that can’t. As I’ve said elsewhere on here, it just takes some imagination, some vision.

That's their failing....the misconception that they need to "make money" from community events.

They want to make money on the events themselves. Collecting rents and fees from organizers and participants for the kinds of things they used to host for free every week (as an investment to bring consumers in the door).

9 minutes ago, MsKreed said:

That's their failing....the misconception that they need to "make money" from community events.

Oh yeah. That’s been the demise of a lot of otherwise great community events. It goes from “this will be fun” to “this will make us money” and it ruins everything.

I feel like I recall someone saying (maybe Kevin?) saying that they decided to gouge the Boy Scouts' Christmas tree fundraiser.....demanding that BSA pay "rent" for using a corner of the parking lot for a few weeks.

Wouldn’t surprise me in the least.

Even the mega malls are hurting:

On 5/18/2026 at 4:22 PM, KarenK said:

They did. Several folks I know moved out because of it.

What an absolutely stupid business model.

We’re gonna charge you a ridiculously priced rent. You’ll be responsible for all repairs to OUR building in that section.

Oh, and one more thing - we want a percentage of your income as well. You know, just a little to wet our beak.”

31 minutes ago, Chris said:

What an absolutely stupid business model.

We’re gonna charge you a ridiculously priced rent. You’ll be responsible for all repairs to OUR building in that section.

Oh, and one more thing - we want a percentage of your income as well. You know, just a little to wet our beak.”

I also know that after Covid when all the smaller places started bailing, the offered new tenants "just" the % of sales. Waived the rent or reduced it significantly. They would not offer that same deal to existing small tenants like the Cafe where I worked. So then they left. Dumbest management company or they really just want it to fail and be done with it