Real Estate Plunge Spreads To Malls

[steven johnson]

Source: ABC News

The recession has already taken its toll on retailers across the country. Now shopping malls themselves are in big trouble. One of the largest mall owners in this country filed for Chapter 11 bankruptcy today.
The recession has already taken its toll on retailers across the country. Now shopping malls themselves are in big trouble. One of the largest mall owners in this country filed for Chapter 11 bankruptcy Thursday.

General Growth Properties, which owns more than 200 malls, is more than $27 billion in debt - another sign that the meltdown in residential real estate is now spreading to the commercial sector as well, as CBS News correspondent Kelly Cobiella reports.

From New York's South Street Seaport, to the 100-store Fanieul Hall in Boston, to the Lincolnshire Mall in Chicago, shoppers are apparently just not spending like they used to. The bankruptcy filing by the Chicago-based GGP is the largest bankruptcy filing in the history of the American real estate business.

"Today there isn't enough capacity in the credit markets to refinance the debt for companies such as ourselves," said Tom Nolan, GGP's chief operating officer.

Read more: http://wap.cbsnews.com/site?t=tp5do6B.vwaNDhUI1AKYRw&sid=cbsnews&tcid=QWC59f6a83323694668b292f926fa1602db

[Sherman A1]

1. Malls have been in decline for several years as shopping patterns have

shifted. This is really no surprise that Mall property is likewise dropping in value if you cannot find merchants to fill their storefronts as they will not have customers coming in the door. Customers have moved away from the mega mall / town square type of location to the enlarged strip mall. Consumers are also shopping more online and at discounters as opposed to department stores which is another reason we are seeing so many combinations / buyouts in those areas.

Shopping is changing as the baby boomers figure out they have enough "stuff" and would rather use their money to save for retirement, go on vacation, for health care and whatever. It is also changing due to 30+ years of flat wages, so that the majority of consumers can't afford to shop at Department stores. Easy credit has made some difference in artificially stretching out that point, but the day of reckoning has been rolling in to corporate bottom lines for the last few years.

[davidthegnome]

2. Excellent points

I live way up here in the far north of Maine. The nearest Mall is a 45 mile (roughly) drive from here. Now perhaps the smaller mall here isn't a good indication of the status of malls throughout the Nation - but I have seen more shops close lately than ever before.

I can't even remember the last time my parents went shopping at a mall, in their late 50s now, heading towards retirement. They and the few like them that I know who are earning a living wage or better, seem to be saving or spending on necessities.

I would not say that the day of reckoning has come quite yet, but I believe it IS coming. The day of reckoning (IMO) will be the day that corporate big shots realize they can no longer continue on their present course if they wish to succeed or survive. The problem, sadly, is not that there isn't enough money to go around, the problem is that the money that should be going around is in the hands of the elite few.

What a better Nation this would be if we had some way to limit corporate greed.

[bulloney]

3. The concept of the new malls in the northern climates is nothing short of stupid.

They are a collection of stores you have to go in and outdoors to go from store-to-store. Maybe that works in the areas of the country where the weather is pleasant year-round. But during the winter, it's a pain in the ass walking across snow-covered sidewalks and parking lots, going in and out of the cold and getting sleet blown in your face.

In recent years such malls have gone up in Columbus, Toledo and probably other locations in Ohio. I think these kinds of malls will have a short life. They may work fine in the warmer climates, but not in the snow belt where temperatures can drop to sub-freezing levels for significant portions of the year.

[leftyladyfrommo]

4. POur Malls in Kandsas City have been dead for years.

They all just sit there empty and decaying.

The up and coming shopping areas are all open with separate buildings.

[Blandocyte]

5. Can we buy em at foreclosure auctions now?

I'm thinking Blandocyte Party House...

[bemildred]

6. With a bit of fixing up, these places could make excellent homeless shelters.

No need to make people camp on river bottoms and under bridges.

[davsand]

7. That sure would redefine the "mall crawl" wouldn't it...

Our local mall is owned by General Growth, so I am maybe a little more jaded than some folks-I dunno. Our local mall is filled up with places like Gap, Hollister and Aeropostal (places we don't shop, in other words.) I know there are some families locally that do shop there, but really, when I go to the mall, it seems to me like it is full of kids roaming around with sodas and cell phones in their hands. I sure don't see a lot of bags in people's hands where they have been buying stuff.

Stores cannot afford to pay premium rents if they are not making the sales--so you KNOW they are going to pull out as soon as they can.

Seems to me that if the malls are going dark the image of the "mall crawl" is now gonna be one of the mall owners crawling up to us all to subsidize these behemoth buildings with no value and a huge liability.


Laura