Across the United States, many suburban malls have fallen into decline, leaving behind vast, underused commercial spaces that present both challenges and opportunities for redevelopment. Efforts to transform these "dead malls" into vibrant mixed-use neighborhoods are often hindered by outdated legal agreements and zoning rules, complicating attempts to revitalize these properties.
Legislators and urban planners involved in the YIMBY ("yes in my backyard") movement emphasize the potential to convert vacant mall sites into housing and community hubs. While the concept appears straightforward, redevelopment efforts frequently encounter obstacles stemming from long-standing reciprocal easement agreements (REAs) and other tenant covenants tied to original anchor stores.
Sunrise Mall in Citrus Heights, California, exemplifies this predicament. Opened in 1972, the mall now features largely vacant storefronts and deteriorating infrastructure, with only one of its five original anchor tenants, J.C. Penney, remaining. Over the years, mall operators entered into REAs with retailers such as Sears, which restrict changes to store layouts, operating hours, and parking configurations without tenant approval. At a time when key department stores have shuttered or struggled, these agreements have become significant barriers, preserving the mall’s deadlocked status despite multiple redevelopment attempts.
A similar case played out with White Flint Mall in Bethesda, Maryland. The 1975 lease agreement with anchor tenant Lord & Taylor mandated the mall remain an enclosed retail center until 2042 and granted the retailer veto power over significant redevelopment initiatives. When property owners sought to replace the failing mall with a mixed-use complex, Lord & Taylor opposed the changes, ultimately winning a lawsuit that resulted in a $31 million payment to the retailer. Though the building housing Lord & Taylor was demolished in 2023, redevelopment efforts continue to face delays.
The decline of large retail chains is not unusual, as demonstrated by the 2017 bankruptcy of Toys "R" Us. The closure of over 700 stores released millions of square feet of retail space back into the market, much of which was quickly repurposed due to the relative flexibility of stand-alone big-box locations. In contrast, the mall format remains less adaptable largely because of persistent legal constraints.
Restrictions such as REAs, exclusive use clauses, and operating covenants often remain in place for decades, with some agreements binding indefinitely. Negotiating their removal or alteration can involve substantial financial costs, uncooperative rights holders, or outright opposition, stalling redevelopment projects indefinitely.
Experts suggest several measures to address these challenges. First, they recommend suspending prohibitions on residential uses within commercial property contracts, a stance supported by recent legislative changes in states like California. Second, implementing sunset provisions that limit the duration of such restrictive agreements could prevent them from persisting in perpetuity, aligning with historical norms where covenants expired after several decades unless renewed. Third, courts could apply the changed conditions doctrine to invalidate outdated clauses that no longer fit contemporary urban planning needs, such as obsolete parking minimums.
Until these reforms take hold, many malls will remain in limbo, their empty corridors and parking lots reminders of past retail eras. Meanwhile, shoppers can still find remnants of former mall life in remaining outlets before redevelopment transforms these spaces into new community assets.