As many as 250 U.S. shopping malls, about 25 percent, are likely to close in the next five years, according to a study by Coresight Research.
Of America’s 1,000 malls, about 380 are rated C- or D-, meaning they bring in less than $300 in yearly sales per square foot of space. Malls rated C and below “are not viable retail centers in the long term,” according to a report from Green Street Advisors, a real estate analysis firm.
The bankruptcy of Pier One, the J.C. Penney department store chain, and the struggles of Macy’s and other mall stalwarts leaves many centers without enough allure for shoppers who, more and more, turn to online shopping.
Some mall owners hope to convert their dusty spaces into fulfillment centers for online companies. The news that Simon Property Group, which owns more U.S. malls than any other company, has been talking with Amazon about doing just that with empty Sears and Penney stores has given other mall owners a glimmer of hope.
But converting retail space to other uses will prove difficult.
Converting stores to warehouses often requires a zoning change, which could be opposed by nearby residents who fear convoys of trucks dominating their neighborhoods.
Also, municipalities tax retail properties at higher rates than warehouses, giving towns little incentive to authorize the zoning change.
Malls also have been adding indoor theme parks, theme restaurants, and entertainment venues to give shoppers experiences in addition to just merchandise. As we had long forecast, however, these kinds of attractions have fared poorly during the shutdown and face an uncertain short-term future.
The notion of converting empty mall stores to office space also seems to be fading, now that the economic shutdown has hastened the trend to send office workers to home offices.
TRENDPOST: Again, this is old news to Trends Journal subscribers. The “Pall on the Malls” was forecast by Gerald Celente in his bestselling book, Trends 2000, in 1996. There will be no great revival. Trends are born, they grow, mature, reach old age, and die. Malls are a dying breed.
