This is how the Valley’s decades-long mall wars end: The stronger shopping centers are killing off the weaker. But what will take their places?

R.I.P. Malls?

Written by Jimmy Magahern Category: Valley News Issue: September 2017
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From Cinnabons to Study Halls—Plans for the Valley’s troubled malls:

​Fiesta Mall 
Previous life: Back in the ‘90s, the Mesa mall (which toppled Tri-City) was ranked among the 15 busiest in the U.S. 
Future plans: Sears and Dillard’s will continue to operate, but the bulk of the mall will focus on satellite campuses for colleges specializing in business, healthcare and technology. 
Previous life: Arizona’s largest mall when it opened in 1973; site of the movie Bill & Ted’s Excellent Adventure. 
Future plans: A new Walmart Supercenter should keep it on life support until the light rail extension in 2023. Until then, expect more educational outposts like the Phoenix Conservatory of Music and smaller, non-traditional tenants. 
Paradise Valley Mall
Previous life: Once the upscale destination mall for North Phoenix. Although still relatively occupied, owner Macerich lists PV as a “redevelopment property” on its latest quarterly report.  
Future plans: The popular rumor is that the mall will be redesigned to mimic the open-air design of its competitors. Expect more “experiential” retail, too, like the VR Phoenix virtual reality arcade and Valley Drones outlets. 
Illustration by Angelina Aragon.

This summer, Erik Pierson visited his teenage haunt, Fiesta Mall, one last time – before the once-bustling Mesa mall, now nearly vacant, begins its transformation (see sidebar). Streaming the tour on YouTube, where the Gilbert software developer hosts a channel dedicated to “dead malls” called Retail Archaeology, Pierson presses his smartphone to the doors of Macy’s, vacant since 2014.
“That’s like the only thing left, guys,” he says, as the camera focuses on 159,000 square feet of concrete and steel girders. “It’s completely gutted.” 

Pierson’s eerie video paints a now-familiar narrative about the sad state of America’s malls: In the age of Amazon, our old consumer paradises are becoming brick-and-mortar ghost towns, blighting communities they once invigorated. Anchor department stores have been vacating malls en masse, with nearly 350 more closings expected this year. Smaller stores are following suit. Wall Street investment bank Credit Suisse predicts up to a quarter of U.S. malls will likely close within the next five years. 

But that’s only part of the story. Many malls, particularly in wealthier zip codes, are thriving. Visit Scottsdale Fashion Square and you’ll find a 56-year-old mall that draws 19.5 million shoppers a year and is currently renovating its “luxury wing.”

“There’s been a lot of headlines about how e-tailing [online retail] is impacting bricks and mortar,” says Scott Nelson, senior vice president of real estate services for Macerich, the California-based company that operates Arrowhead Towne Center, Biltmore Fashion Park, Chandler Fashion Center, Kierland Commons and Paradise Valley Mall. “But at the end of the day, retailers want to have a physical face and presence for the consumer, and the places where they want to be are the A-plus malls.”

Macerich is “doubling down” investment in its top-tier malls and tweaking its floundering properties to reflect the demographics of their neighborhoods. Macerich’s Desert Sky Mall responded to West Phoenix’s Latino population by replacing the vacated J.C. Penney with a Curacao and adding bilingual Mercado de Los Cielos. PV Mall, which lost shoppers to Desert Ridge Marketplace, Kierland and Scottsdale Quarter, demolished a wing to make room for a Costco and is floating the idea of razing the roof. Malls need to evolve, Nelson says. “They may need to have uses introduced like education, or office, or other mixed-use... to be relevant.”

That is on tap for Fiesta. “In its heyday, Fiesta Mall was the focal point of the East Valley,” says Ray Cashen, president of Cashen Realty Advisors, the broker overseeing the mall’s transition. He believes the mall will again become a hub. “The open, collaborative spaces that already exist in the mall are well-suited to the world of higher education,” he says.

Metrocenter may be the Valley’s most troubled and iconic mall. When rumors spread that its new owner, Carlyle Development Group, was planning to demolish the 44-year-old mall, Thelda Williams, councilwoman for Phoenix’s District 1, which includes Metrocenter, says her office was flooded with calls. “It’s not going to be demolished, at least not immediately,” she says. “But the retail will probably change.”

One path for malls is to humanize the targeted, preference-based algorithms of online shopping. “People are interested today in having a curated experience,” says Local First Arizona CEO Kimber Lanning, citing her record store Stinkweeds as an example. “There’s two camps of consumers now: there’s the Amazon shoppers, who just want convenience and savings, and there’s the local business supporters, who are prioritizing experience,” Lanning says. “And in the middle are the malls.”

That, she says, is the crux of the problem. “If you’re not providing a relationship with your customers and you’re not offering convenience, I don’t know who your base is anymore. And I’m not sure that the malls know, either.”