Traffic-driving anchors like Sears and JCPenney are shutting down stores, and mall owners are having a hard time finding retailers large enough to replace them. With a fresh wave of closures on the horizon, the problem is set to accelerate, according to retail and real estate analysts.
About 15% of U.S. malls will fail or be converted into non-retail space within the next 10 years, according to Green Street Advisors, a real estate and REIT analytics firm. That's an increase from less than two years ago, when the firm predicted 10% of malls would fail or be converted.
"The risk of failure for a mall increases dramatically once you see anchor closures," said Cedric Lachance, managing director of Green Street Advisors. "Their health is very important ... and most of them are highly likely to continue closing stores."
Within 15 to 20 years, retail consultant Howard Davidowitz expects as many as half of America's shopping malls to fail. He predicts that only upscale shopping centers with anchors like Saks Fifth Avenue and Neiman Marcus will survive.
"Middle-level stores in middle-level malls are going to be extinct because they don't make sense," said Davidowitz, chairman of Davidowitz & Associates, Inc., a retail consulting and investment banking firm. "That's why we haven't built a major enclosed mall since 2006."
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10 comments:
If we're going to be successful in becoming a third world country, we must get rid of those malls. After all, you don't see any in those other third world countries, do you?
good bring back mom and pop stores ....long overdue.
Malls are failing because it's cheaper to invest in property and own it rather than pay enormous amounts on renting. Simple economics 101.
Y'all better start thinking about what life is going to be when gas soon become more trouble to drill and extract than its worth...or country is built around the car and highways. What happens when the cars co no longer go?
Then we should develop an upscale retail district down town and bring stores in, such as gap, macy's etc. mixed in with private shops. Like Rehobeth and Dewey Beach
Get ahead of the game instead of waiting to subvert disaster.
11:40 that is not any economics class I ever attended where you are not generating income off your property.
Not sure where you went to school, but that's not a very bright statement.
Vacant dilapidated properties do not generate income, and are simply a money pit.
11:40 Do you own a house or buying a house, or do you rent? Explain your situation and why you choose to support your idea. Buying and owning always trumps paying overly priced rentals.
11:45 are you crazy? Salisbury IS NOT business friendly. No mall, no downtown, no Salisbury, just like that. Aren't you just so proud of yourself Ireton, Pollitt, Day, Shields, Mitchell, Comegys, and especially Tilghman? What a mess all of you have made of Salisbury.
And the restaurants going out of business or about to.
Malls are only good to get shot in these days.
Americans need to go back to pastimes other that shopping.
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