Malls Were Left for Dead. Now They Are the Top Performer in Commercial Real Estate.

This is becoming more typical of mainstream media. The WSJ has a major story on Malls coming back but they don't really explain why or put the data in context. I had Claude take a look at this. Claude arguably did a better job.

Gen Z is the biggest driver. WSJ reported that consumers aged 18 to 24 purchased 62% of their merchandise in stores last year — 10 percentage points more than shoppers 25 and older, citing data from Circana. The theory is generational: this cohort spent formative years in COVID lockdowns, and browsing, socializing, and wandering a mall with friends are experiences a screen can't replicate. Social media reinforces it — influencers driving purchases, fitting-room selfies, and digitally-native brands opening physical stores to build brand identity in person.

Retailers are responding with real capital. Pacsun grew its store count in 2025 for the first time in 18 years and plans up to 35 new locations over three years — its CEO attributed it directly to Gen Z showing up. This isn't just a US phenomenon either — Burberry cited double-digit Gen Z growth in Greater China and Asia Pacific as a factor in its sales uptick.

It's really an "experience" pivot, not a retail pivot. The winning malls aren't just recovering — they're being reconfigured around how people want to spend time, with entertainment, dining, and interactive concepts moving from secondary to central to the draw. The underlying logic: if e-commerce delivers any product to your door in two days, walking into a store has to offer something beyond the transaction — direct-to-consumer brands that started online, like Princess Polly and Warby Parker, are opening mall locations specifically for that sensory, brand-building layer.

But it's bifurcated, not universal. The recovery is real but heavily skewed toward winners. 2025 was brutal overall: over 8,100 store closures, up roughly 12% from 2024, with Party City, Joann, and Rite Aid all liquidating entirely, and Macy's closing 150 more stores through 2026. The malls bucking that trend are the ones actively reinvesting — think King of Prussia's dining hub expansion or the Houston Galleria's luxury wing anchored by Saks and Nobu. Meanwhile weaker properties are still dying — San Francisco Centre closed in January 2026 after both anchor tenants went vacant. There's also a parallel story with strip malls and open-air centers, which have benefited from strong grocery-anchor foot traffic and tenants (coffee shops, nail salons, medical offices, yoga studios) offering services e-commerce can't replicate.

So the short version: it's less "malls are back" broadly and more "malls that reinvested in experience, riding a Gen Z wave that values in-person retail, are pulling away from everyone else" — while the weaker, department-store-anchored properties keep declining.

Malls Were Left for Dead. Now They Are the Top Performer in Commercial Real Estate.

Mall values jumped 13% in a year, more than doubling commercial-property price gains

By Kate King, WSJ

Sept. 14, 2026 5:30 am ET

Mall values rose 13% over the past year, outperforming all other commercial property sectors, according to real-estate analytics firm Green Street.

The long-beleaguered mall business is finally having a moment.

After years of lagging behind the commercial-real estate recovery, malls are outperforming every other property type as more investors conclude that enclosed shopping centers have more staying power than previously understood.

Mall values are up 13% over the past year, according to real-estate analytics firm Green Street. That tops all 10 commercial property sectors and is more than double the increase in overall commercial real-estate prices.

Lackluster returns in the multifamily and office sectors are undoubtedly pushing some investors toward retail and mall properties, where occupancy and rent growth have held up better in large part due to a lack of new supply.

But resilient consumer spending and limited retailer bankruptcies have also put malls on their strongest footing in years. The most successful mall owners have continued to draw crowds by renovating their properties and adding tenants that are less vulnerable to online competition, such as luxury retailers, popular restaurants like Din Tai Fung and entertainment venues.

Shares of Simon Property Group, the U.S.’s largest mall owner, surpassed their previous record high in July for the first time since 2016. The stock has outperformed the S&P 500 over the past 12 months.

It is a far cry from where the sector stood just five years ago, when prolonged closures during the pandemic torpedoed foot traffic to malls already reeling from department-store closures and anxieties over the rise of online shopping. An estimated 200 malls have closed since 2008, according to Green Street, leaving about 900 operating across the U.S.

“In terms of how we think about the malls today fundamentally, this is probably the best it’s felt post-Covid,” said Ronald Kamdem, head of U.S. real-estate investment trust and commercial real-estate research at Morgan Stanley.

The American mall revival has been so strong that Paris-based owner Unibail-Rodamco-Westfield is getting back in the game just four years after it said it planned to ditch the U.S. market. The company has committed to spend nearly $1 billion this year buying out its partners at two of its malls: Westfield UTC in San Diego and Westfield Southcenter in deals that gave it full control of both properties.

“We see the type of rent growth that we haven’t seen since the beginning of the 2010s,” said URW Chief Executive Vincent Rouget.

Rouget said the U.S. market is now a growth driver for the company, with tenant sales and net-operating income growth outpacing the broader portfolio average. URW shed many lower-performing regional properties in recent years but still owns 14 American malls that rank among the nation’s top performers.

It isn’t just trophy malls that are on the upswing. Middle-market properties are also enjoying increasing occupancy and sales growth.

CBL Properties, a Chattanooga, Tenn.-based mall owner that spent a year in bankruptcy protection after the pandemic hit, said foot traffic and sales are up this year. So is its stock price, which has soared 48% since the start of the year.

The company, which has sold off or walked away from more than two-dozen malls since 2013, has bought five new properties since July 2025.

“It’s really been, I think, even better than we had hoped,” said CEO Stephen Lebovitz.

And younger Americans are frequenting malls to shop and socialize. At Tysons Corner Center in Virginia earlier this year, Heather Eilers-Bowser picked out sneakers for her husband and son while her 13-year-old daughter hunted for a pair of trendy sweatpants she had seen online at the youth-focused brand Edikted.

Eilers-Bowser is sometimes shocked by how much the younger generation spends at the mall. “She has more expensive makeup than I do,” she said of her daughter. “And a lot more.”

Despite recent gains, mall values still remain far below peak levels reached a decade ago. And plenty of investors remain skeptical.

Bob Neighoff, a portfolio manager at alternative-asset manager Mariner Investment Group, isn’t convinced that all of the recent improvement in mall performance will last. Many mall owners have also replaced vacant department stores with entertainment and restaurants, which Neighoff said are challenging to replace if they close.

“Unlocking the dirt is the true value of the mall,” Neighoff said. “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 in St. Louis illustrates how the mall landscape has changed in just a few years. In 2022, the 1.2 million-square foot mall’s debt was coming due as lenders were steering clear of midtier malls, leaving the company unable to refinance.

West County Center’s value had declined 30% over the prior decade. Vacancy was ticking up, with three of the center’s four prime restaurant spaces empty. Competition from a nearby mall was sapping sales from one of the mall’s main anchors, Nordstrom.

Today, the mall is thriving. Business has picked up at its department stores after Nordstrom closed its location at the other mall and Macy’s renovated its store. Cheesecake Factory and Urban Outfitters will open later this year. Overall, tenant sales have increased 13% since 2023.

Lebovitz expects to close on a refinancing of West County Center within 60 days.

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