Somehow, the shopping center apocalypse ended up with more stores, not fewer.
My trusty spreadsheet tracked the growth in overall shopping space in California and nationwide by analyzing CoStar data from 2020 to 2025. It tells us that plenty of retail square footage was demolished, but surprisingly, slightly more new shopping area was constructed.
For a supposedly dying industry, it’s startling to know that between 2020 and 2025 – pandemic lockdowns and all – California built 8 million more square feet of retail space than it tore down. Nationally, a net 257 million square feet of shopping center space was added over these six years.
For the nation’s top retailing state – with 1.7 billion square feet of retail – that’s meek change. Six states had bolder shopping efforts, led by Texas, which added 82 million net square feet, followed by Florida, up 36 million, and North Carolina, up 15 million.
Even Bill Shopoff didn’t know retail construction outpaced demolition. And he’s spearheading a transformation of the shuttered Westminster Mall into the Bolsa Pacific, a mixed-use project in Westminster.
The work includes tearing down the 1.2-million-square-foot shopping hub and replacing it with 2,250 homes, 120 hotel rooms, two parks, and 210,000 square feet of new shopping space.
To Shopoff, retail’s net growth is a statement about a shopping center’s enduring appeal.
“Well-thought-out retail still has a place,” says the chief executive of a development company that bears his name, “It’s certainly not dying. The malls doing well, thrive. The ones that don’t, guys like me knock down.”
Tearing it down
The surprise may lie in the high-profile attention paid to tearing down shopping centers rather than building them.
Across California, 23 million square feet of retail space were demolished over the past six years. California led the nation in these demolitions, outpacing Florida and Texas, which each cleared out 17 million square feet.
How big is that destruction? It amounts to roughly eight South Coast Plazas, gone. The wildly successful mall in Costa Mesa is California’s largest retail hub, with 2.8 million square feet of retail and dining space.
Retail’s wrecking ball has been busy thanks to the online shopping boom that intensified during pandemic lockdowns.
Numerous big-name retailers collapsed, leaving empty storefronts. Movie theaters, once a main attraction, struggled and closed – taking away another reason to visit the mall. Finances soured for many out-of-date shopping centers. Meanwhile, dying retail sites became prime locations for residential construction and hotels – and new retail development, too.
Coming soon
Amid all the doomsday chatter about in-store shopping, what’s clearly overlooked is the ongoing construction of new retail space.
That’s probably because it’s not as eye-catching as the rubble of your once-favorite mall. Today’s retail development is also more modest – typically smaller neighborhood centers rather than the construction of splashy regional malls or other shopping meccas of past eras.
Plus, the typical tenant lineup at shopping centers has changed. Service providers – medical, athletic and beauty, to name a few – are a major addition. These merchants weren’t smacked by online shopping habits like traditional retailers. Discount retailers, from dollar stores to merchants with ever-changing supplies of cheap goods, grew in popularity.
Food and fun have gained prominence, too, as retail hubs offer consumers shopping spun as a playful destination, not simply a place for chores.
“There never really was a retail apocalypse,” said Jesse Gundersheim, CoStar’s senior director for market analytics. “What we’ve seen is a retail transformation, not a retail extinction event. E-commerce changed consumer behavior, but it didn’t eliminate the need for physical stores. In fact, many consumers, particularly younger generations, are rediscovering the value of in-person shopping.”
California developers added 31 million square feet of retail space between 2020 and 2025. While that sounds like a lot, it’s subpar. Texas raced ahead with 100 million, and Florida added 53 million.
But it’s a modest pop for California. New shopping space equaled only 2% of its existing supply, trailing the 3% nationwide expansion. Texas was No. 1, with its new shopping spots accounting for 6% of its total retail space.
“California’s slower growth reflects economic realities and development constraints,” the analyst said. “The entitlement process is often longer and more expensive than in many other states. In many coastal markets, development sites are limited.”
The growth net
What’s the secret sauce behind this chapter of growth for brick-and-mortar retail?
“Retail follows rooftops, jobs and consumer spending,” Gundersheim said.
Retail still has its headaches. Not every state is growing. Shopping space actually shrank in seven states from 2020 to 2025. California grew only 0.5%.
Still, the nation’s shopping center owners added 1.4% more space than they demolished over the past six years. Contemplate what my spreadsheet found when the states were split into three groups by their ability to grow retail.
The 17 states strongest in retail additions – led by Texas, up 5%, and South Dakota and Idaho, up 4% – combined to add 4% to their shopping space. Demolitions were just 1%. So there’s a net gain of 3%.
Contrast that pattern with shopping’s laggards. These 17 states, including California, constructed new stores equal to 2% of their total retail space. However, they demolished roughly the same amount. So, square footage has been flat since 2020.
Here’s a key difference maker. Remember, real estate’s three key words: “Jobs. Jobs. Jobs.”
Retailing’s high-growth states saw total job counts expand by 9% over the same six-year period. In the same period, employment in the laggard states grew by only 2%. California jobs were up 3%.
Peek at population swings, too. Retail’s star states added 5% more residents in six years. The laggards were up only 1%. California’s population fell 0.4% in this period.
Shopping space, it seems, follows the money.
Value shopping
Retail’s revival is evident in more than just the growing roster of shopping spots.
The value of major U.S. malls rose 12% in the year ended in July. That’s the top result among the 12 commercial real estate niches tracked by real estate investment analysts at Green Street.
Plus, mall values are 3% above commercial real estate’s 2022 price peak. That’s also the industry’s best four-year investment results.
This turnabout is reinforced by the second-best performer on Green Street’s rankings: strip malls, the smaller cousins of the giant shopping hubs.
These neighborhood shopping spots saw their collective values climb 9% over the past year and are now just 2% shy of their 2022 high.
“Retail is one of the healthiest commercial real estate sectors,” Gundersheim said. “Compared with office, apartment and industrial properties, retail is delivering stronger occupancy rates and rent growth. Unlike apartments and industrial, which experienced significant development booms, retail construction remained relatively restrained. At the same time, consumer spending continues to grow, supporting retail space. The result is a sector that has largely avoided overbuilding while benefiting from steady demand.”
Jonathan Lansner is the business columnist for the Southern California News Group. He can be reached at jlansner@scng.com
- Try Jonathan Lansner’s Substack collection of economic trends. CLICK HERE!
August’s most-popular Southern California real estate stories …
No. 1: Where is OC’s hottest homebuying neighborhood?
No. 2: 338-unit affordable housing complex breaks ground in Tustin
No. 3: Peek inside this Newport Coast estate that sold for $39M
No. 4: Enderle Center sold, Campo on 17th moves ahead in Tustin
No. 5: Rents rise in just 22% of SoCal. See which cities got hikes
No. 6: Home prices dip in 38% of OC. How did your ZIP do?
No. 7: LA-OC’s worst-paying jobs: Can those wages pay the rent?
No. 8: LA-OC homes still ‘unaffordable’ even with a 0% mortgage
No. 9: Corona del Mar retail center trades hands, a first in 80 years