America's malls are rotting away

[left-of-center2012]

America's malls are rotting away

http://money.cnn.com/2017/12/12/news/companies/mall-closing/index.html

The worst is yet to come for American shopping malls. As Macy's, JCPenney, Sears and other major department stores close their doors, the malls that housed those stores are facing a serious crisis.
That's because when so-called anchor tenants leave a mall, it opens the door for other stores to break their leases or negotiate much cheaper rent.

As one big store closes, it can take several smaller stores along with it like a house of cards. Experts predict that a quarter of American malls will close in five years -- around 300 out of 1,100 that currently exist.
Retailers often sign co-tenancy agreements in their leases with malls, allowing them to reduce their rent or get out of a lease if a big store closes.
That's because the smaller retailers next to anchor stores no longer benefit from the foot traffic that the major retailers received ...

Sears (SHLD), which had operated nearly 3,800 stores as recently as a decade ago is now down to 1,104 stores. Macy's (M) closed 68 stores this year, and JCPenney (JCP) was set to shutter 128.
Some successful malls may be able to survive if they can convert department stores' spaces into better attractions for consumers.
There will be a new push to get food halls and entertainment in malls, and make it more of an experience that will draw people in.

Experts classify malls into "A" "B" "C" and "D" grades characterized in part by sales per square footage of the malls. "B" malls and below are going to have a particularly hard time with the financial burden of the changing mall landscape.

The retail loan default rate is currently hovering around 5%, but Brown expects that number to triple.
And with defaults come bankruptcies -- lots an lots of bankruptcies. More than 300 retailers have already filed for bankruptcy this year.

[nycbos]

1. Well this is what happens when you can use your phone to get the stuff you need.

[customerserviceguy]

5. It can be difficult to buy clothing without trying it on

Yes, you can return anything that you buy online, but I'm one of those people who hates the hassle of it.

Where I moved from in NY, the mall was literally crumbling, shifts in the ground were causing cracks in the floors, etc. And during and after the Great Recession, the place lost tenants like crazy. But, two anchor tenants, Sears and Macys remained, and they demolished the rest of the structure. In it's place is an upscale uncovered mall, made to look like a fake town. A lot of frou-frou stores in there, like Coach, but they did build a really incredible 12 screen cinema, and restaurants in "shops". The old food courts were just messy conglomerations of junk food that really weren't all that inviting.

I go back there every once in awhile, it will be interesting to see if the new concept prospers or not.

[Freddie]

8. Same happened to my local (ex)mall

During the height of the mall craze in the 70's my town got a small mall - a dept store (Hess's, now Bon-Ton) on one end, a supermarket on the other end and the usual mall stuff (clothes, shoes, Radio Shack, a CVS) in the enclosed mall. In the 90's the mall stores went out one by one except CVS and Pearl Vision. So they "de-malled" the place, turning it into a conventional shopping center with stores facing the parking lot. Was doing well for years but now features empty stores where Radio Shack and CVS (moved nearby) were.

[pandr32]

2. We all subsidized them

...and many came from rezoned green belts.
These structures should become community marketplaces with stores leased at low rates to real Ma and Pa stores, one of a kind businesses, etc. The center areas should be like a community farmer's market and buskers and other entertainers should be all over. We could use the big anchor store spaces for public libraries or something meaningful.

[left-of-center2012]

3. I like your idea

especially the farmers market

[pandr32]

10. Thank you

[Roland99]

4. One here in central FL is being converted....

https://www.bizjournals.com/orlando/news/2017/02/27/first-look-heres-whats-in-store-for-west-oaks-mall.html

Last week, it was revealed that Bed Bath & Beyond Inc. (Nasdaq: BBBY) plans to build out a nearly 35,000-square-foot call center, known as the Florida Call Center, bringing 500 jobs to the area, as previously reported by Orlando Business Journal.

Prior to that, the 70,000-square-foot SunPass Centralized Customer Service Center, operated by Xerox Corp., opened last year in a portion of the former Sears, which also was expected to create 500 jobs.

Much more at link

[louis-t]

6. I see retail coming back, only smaller.

The days of the huge mall are over. The cost of shipping will drive the stores to reopen smaller venues. People want to shop and walk.

[Wellstone ruled]

7. Folks,the real Game Changer was

Eddie Lambear when he bought Sears and Company. First thing he did was fire his most productive Floor Sales People and replace them with people who had a Pulse. Sears set the Price Point on Merchandise and other Services National. Anyone who operates in this Space,follow Sears lead. Nordstum's Is in a Class by it's self,they have never lost track of how they and what they do to be successful.

Have you been in a Macy's and they have one Merchandiser/Sales Person covering three or four Areas? That is why General Retail is getting clobbered.

[Progressive dog]

9. When those malls close, the tax base shrinks

and local governments have to cut spending.
The Berkshire mall in Lanesborough, MA was once a busy place. It has lost Best Buy, Macy's, J.C. Penny, and Sears in just over 2 years. Target is the only remaining anchor and is attached to the mall, but on a separately owned property.
That mall is almost certain to be among the quarter of malls that will go out of business.

[sandensea]

11. Hey. They can always lease them out to film crews.

[quartz007]

12. Malls in China are empty