In the 12 months ended March 31, U.S. malls collectively posted a 6.5% decline in tenants’ same-store sales, according to Green Street Advisors Inc., a real-estate research firm. The recent slump was led by an average 7.3% sales drop at Simon Property Group Inc., the operator with the largest number of mall locations.
The industry’s woes are worsening. Thinning customer traffic, and subsequent hits to tenants’ sales and profits, prompted Standard & Poor’s Corp. last month to lower the credit ratings of the department-store sector. That knocked Macy’s Inc. and J.C. Penney Co. into junk territory and pushed others deeper into junk. Sears Holdings Corp., a cornerstone tenant at many malls, is expected to close 23 stores this month and next.
General Growth Properties, which owns more than 200 U.S. malls, filed for bankruptcy protection April 16, due mainly to its failure to refinance billions of dollars of debt coming due. While the real-estate investment trust has said the filing will have no impact on its mall business, analysts say a prolonged bankruptcy proceeding could make retailers nervous about sticking around once their leases expire.
The severity of the recession is turning some malls that were once viewed as viable into potential casualties. “Any mall that’s sitting on life support is probably going to get its plug pulled” as the economy stalls, says Michael Glimcher, chairman and CEO of Glimcher Realty Trust, which owns 23 U.S. properties, including Eastland Mall in Charlotte.
On the low-income east side of Charlotte, N.C., the 1.1-million-square-foot Eastland Mall recently lost a slew of key tenants, including a Dillard’s and, next month, a Sears. Sales per square foot at the venue fell to $210 in 2008 from $288 in 2001.
With their maze of walkways and fast-food courts, malls have long been an iconic, if sometimes unsightly, presence in the American retail landscape. A few were made famous by their sheer size, others for the range of shopping and social diversions they provided.
But the long recession is helping to empty out the promenades. Some analysts estimate that the number of so-called “dead malls” — centers debilitated by anemic sales and high vacancy rates — will swell to more than 100 by the end of this year.
One industry rule of thumb holds that any large, enclosed mall generating sales per square foot of $250 or less — the U.S. average is $381 — is in danger of failure. By that measure, Eastland is one of 84 dead malls in a 1,032-mall database compiled by Green Street. (The database focuses heavily on malls owned by publicly traded landlords and doesn’t account for several dozen failing malls in private hands.) If retail sales continue to decline at current rates, the dead-mall roster could exceed 100 properties by the end of this year, according to Green Street. That’s up from an estimated 40 failing malls in 2006, before the recession began.
“This time around, because of the dramatic changes in consumer spending practices, we’re very likely to see more malls in the death spiral than we’ve ever seen before,” says Green Street analyst Jim Sullivan.
Failing malls didn’t get into trouble overnight, and most began their descent long before the tough climate. Typically, a mall begins to suffer due to job losses and other pressures in the surrounding neighborhood or because a newer mall opens nearby. The loss of key tenants — such as the wave of department-store closures over the past three years — hastens the demise. Also sapping malls’ vibrancy: the increased preference among consumers for big-box stores, such as Wal-Mart Stores Inc. and Target Corp., which rarely operate in malls.
Developers, in fact, have been moving away from the enclosed-mall format in favor of big-box centers anchored by free-standing giants such as Wal-Mart or open-air shopping centers with tiny parks and outdoor cafes sprinkled among fashion stores. Only one enclosed mall has opened in the U.S. since 2006: The Mall at Turtle Creek in Jonesboro, Ark.
These pressures, coupled with landlords’ difficulties refinancing debts in the bone-dry capital markets, signal tough years ahead for retail-property owners — even after consumer spending begins to rebound. “The shopping-center bankruptcies and the REIT bankruptcies are the ticking time bomb that people aren’t talking about,” says Burt P. Flickinger III, managing director of Strategic Resource Group, a research firm.
Four months ago, executives at J.C. Penney headquarters in Plano, Texas, called a “triage” meeting to discuss a recent study of the financial condition and health of the 550 malls housing Penney stores. The study’s conclusion: 15 of its stores are located in malls at risk of failure.
“We started to see things heading south,” says Penney CEO Myron “Mike” Ullman III. It was important, he notes, to “get ahead of this” mall problem by reviewing Penney’s new store strategy to determine whether it might relocate existing mall stores. Over the past 18 months, Penney’s weekly sales have been trending better at stand-alone stores that aren’t attached to traditional malls.
Tags: commercial industry, Global Recession, USA
Websites worth visiting……
[...]here are some links to sites that we link to because we think they are worth visiting[...]………
Visitor recommendations trackback……
[...]one of our visitors recently recommended the following website[...]………
Read was interesting, stay in touch……
[...]please visit the sites we follow, including this one, as it represents our picks from the web[...]……
here are some sites…
Good evening everybody here are some links that contains information that you may find useful yourselves. It’s Worth Checking out…
Check this out……
[...] that is the end of this article. Here you’ll find some sites that we think you’ll appreciate, just click the links over[...]………
Check this out……
[...] that is the end of this article. Here you’ll find some sites that we think you’ll appreciate, just click the links over[...]………
The best website……
[...]here are some links to sites that we link to because we think they are worth visiting[...]……
Online Article……
[...]The info mentioned in the article is some of the best available [...]………
Check this…
that is the end of this article. Here you’ll find some sites that we think you’ll appreciate, just click the links over….
Great website…
[...]we like to honor many other internet sites on the web, even if they aren’t linked to us, by linking to them. Under are some webpages worth checking out[...]………
Blogs ou should be reading…
[...]Here is a Great Blog You Might Find Interesting that we Encourage You[...]……
Gems form the internet…
[...]very few sites that occur to be detailed below, from our point of view are undoubtedly well worth checking out[...]……
bid us…
You made some decent points there. I looked on the internet for the problem and located most people will go together with together with your website….
bid us…
I found your blog site on google and examine a couple of of your early posts. Continue to keep up the superb operate. I simply further up your RSS feed to my MSN News Reader. Searching for forward to studying more from you in a while!…
amazon video …
[...]Once I originally commented I clicked the -Notify me when new feedback are added- checkbox and now every time a remark is added I get 4 emails with the identical comment. Is there any method you may remove me from that service? Thanks![...]…
Camsex…
[...]Camsex kostenlos testen[...]…
Online Article……
[...]The information mentioned in the article are some of the best available [...]……
Great site!…
I visit your site everytime. I’m adict to your site! hehe…
Websites you should visit…
[...]below you’ll find the link to some sites that we think you should visit[...]……
Online Article……
[...]The information mentioned in the article are some of the best available [...]……
Me encanta tu sitio….
[...]solo queria decirte que me encanta tu sitio[...]…
Awesome website……
[...]the time to read or visit the content or sites we have linked to below the[...]………
Blogs you should be reading……
[...]Here is a great blog you might find Interesting that we encourage you[...]……
Me encanta tu sitio….
[...]solo queria decirte que me encanta tu sitio[...]…
Online Article……
[...]The information mentioned in the article are some of the best available [...]……
[...]please visit the sites we follow, including this one, as it represents our picks from the web[...]……
[...]one of our visitors recently recommended the following website[...]……
Great website…
[...]we like to honor many other internet sites on the web, even if they aren’t linked to us, by linking to them. Under are some webpages worth checking out[...]………
Cool sites……
[...]we came across a cool site that you might enjoy. Take a look if you want[...]………
Visitor recommendations trackback……
[...]one of our visitors recently recommended the following website[...]………
Read was interesting, stay in touch……
[...]please visit the sites we follow, including this one, as it represents our picks from the web[...]……
Websites worth visiting……
[...]here are some links to sites that we link to because we think they are worth visiting[...]………
Online Article……
[...]The info mentioned in the article is some of the best available [...]………
Sources…
[...]check below, are some totally unrelated websites to ours, however, they are most trustworthy sources that we use[...]……
Great Site……
[...]check this out as this contains important information about[...]…
Great Site……
[...]check this out as this contains important information about[...]…
Our Trackback……
[...]very few websites that happen to be detailed below, from our point of view are undoubtedly well worth checking out[...]………
Yo Momma…
http://www.momma.info/...
Awesome website……
[...]the time to read or visit the content or sites we have linked to below the[...]………
Great website…
[...]we like to honor many other internet sites on the web, even if they aren’t linked to us, by linking to them. Under are some webpages worth checking out[...]………
Great Site……
[...]check this out as this contains important information about[...]…
The best website……
[...]here are some links to sites that we link to because we think they are worth visiting[...]……
Cool sites……
[...]we came across a cool site that you might enjoy. Take a look if you want[...]………
Websites worth visiting…
[...]here are some links to sites that we link to because we think they are worth visiting[...]……
MyBigg.Com : Quality Paid to Click Business And Cheap PTC Advertising…
Inexpensive PTC Advertising!At MyBigg you obtain paid by simply searching the sponsor’s/Paid in order to Click on ads.Work both at home and you merely simply click a link and see an internet site for a couple just a few seconds to earn money on the in…
Cool sites…
[...]we came across a cool site that you might enjoy. Take a look if you want[...]……
Online Article……
[...]The info mentioned in the article is some of the best available [...]………
Awesome website……
[...]the time to read or visit the content or sites we have linked to below the[...]………
You should check this out……
[...] Wonderful story, reckoned we could combine a few unrelated data, nevertheless really worth taking a look, whoa did one learn about Mid East has got more problerms as well [...]………
Great website…
[...]we like to honor many other internet sites on the web, even if they aren’t linked to us, by linking to them. Under are some webpages worth checking out[...]……
Links…
[...]Sites of interest we have a link to[...]……