Shopping Malls Split Between Luxury Success and Budget Bankruptcy

The Great Divide Emerges

America's shopping malls are experiencing a dramatic split that mirrors the nation's growing wealth gap. While the number of malls has plummeted from around 2,500 in the 1980s to just 700 today, with Capital One projecting that 87% of all large-scale malls may shutter within the next 10 years , a distinct pattern has emerged: luxury malls are thriving while budget-oriented centers face extinction.

Operators of the top luxury malls are constantly focused on attracting the right mix of historic luxury brands and buzzy, contemporary upstarts, and finding unique touches to make their property feel truly special to the high-net-worth shoppers who have no shortage of places to shop. These range from hosting events like styling sessions to adding features like private shopping rooms — anything to make shoppers feel like VIPs.

The contrast couldn't be starker. Mall visitors have relatively high median incomes; in 2025, the market captured by indoor malls registered a median income of $91,600 per year , while struggling centers in less affluent areas face bankruptcy and closure.

Luxury Malls Reinvent the Experience

High-end shopping centers are redefining what it means to visit a mall. "It's not exclusively the merchandise that draws people in, because it's increasingly harder to find something that you can't buy from your living room couch," says Matthew Whitman Lazenby of Bal Harbour Shops. "We're hoping to offer an emotional connection, and not just a transaction."

These premium destinations are investing heavily in experiences. Tysons Galleria's Neiman Marcus store is undergoing a $100 million renovation, while the mall hosts brands like Faherty and Free People. Malls are integrating attractions like concerts, virtual-reality gaming zones, fitness studios, coworking spaces, art installations, pop-up shops and food halls that feature local and artisanal vendors. The American Dream Mall in New Jersey calls itself "an entertainment and retail center", which features an indoor Nickelodeon theme park, water park, ski slope and high-end luxury stores.

The strategy is working. Glossier's location at NorthPark Center has been "highly successful," ranking "in the top third of our stores in new customer penetration, despite being our smallest footprint to date."

Budget Malls Face Extinction

Meanwhile, traditional malls serving middle and lower-income shoppers are collapsing at an alarming rate. Retail advisory firm Coresight Research predicts that closures will escalate to approximately 15,000 this year, with store openings expected to remain steady at approximately 5,800, representing a net loss of more than 9,000 stores.

The casualties keep mounting. The list of retail chains that filed for bankruptcy and disappeared from malls and shopping centers during and right after the pandemic includes Tuesday Morning, Christopher & Banks, Stein Mart, and Lord & Taylor. More recently, beauty retailer The Body Shop liquidated and closed all stores, teen retailer Rue 21 filed for Chapter 11 protection for a third time and closed all 540 locations, Party City filed for Chapter 11 for a second time with plans to liquidate, and Joann Fabrics filed for bankruptcy twice and closed all 800 stores.

Coresight Research estimated that 25% of America's 1,000 or so malls would close in the next three to five years—250 malls across the country, though the ones most at risk are less affluent ones that bring in fewer sales per square foot than thriving luxury malls.

The Future of American Retail

The transformation isn't just about survival—it's about complete reimagining. As mall tenants change, some are seeing as much as triple the revenue from former Sears or Macy's locations from bookstores, grocery stores, and even churches that lease square footage. About 46% of mall redevelopments are mixed-use, with about 30% of mall anchor redevelopments being residential and almost 54% of mixed-use redevelopments incorporating housing.

This bifurcation reflects broader economic trends. Wells Fargo reported that 82% of Gen Z adults were cutting back on spending, as were 60% of teens , forcing retailers to choose between serving affluent customers willing to pay premium prices for experiences or closing entirely.

The mall's future will be determined by its ability to serve as more than a shopping destination. "These places that used to be siloed as just going to purchase something now have to become part of that new mindset that we live, live, live," says David Glover of Gensler. While adding living and working spaces increases foot traffic, there also needs to be increased "dwell time," or the length of time of a consumer's visit. Those that master this transformation will thrive; those that don't will join the growing list of retail casualties.