How Malls Die
Bloomberg discusses the Crystal Mall in Waterford Connecticut as an example of the fate of a Typical Class B Mall, Anywhere, USA.
All in all, as many as 25,000 stores could close in the U.S. this year, mostly in malls, according to Coresight. That would demolish the previous record of about 9,800 closures, set in 2019.
Between bankruptcies, distressed owners, store closures and existing vacancies, at least half of Crystal Mall’s square footage is now at risk. And hundreds of other B malls around the country are in the same boat.
Class B Mall Locations
The lead image is a composite I created from an interactive Bloomberg graphic.
Six retailers in the mall have filed for bankruptcy in the last three years.
Retailers such as Macys, the Christmas Tree Shops, etc., (black and white hatched) have not said they are leaving the Waterford mall, but they have announced closures.
With 35 vacant storefronts already, the mall appears doomed.
The same fate awaits hundreds of similar malls across the country.
Mish
Well one year later and Macy’s how now closed it’s doors. Christmas tree shop is a strong anchor but not sure it’s enough to keep it going longer. My folks mall got a new life when Dick’s Sporting Goods moved in but seems the only stores that can afford mall space are high end which won’t work in my area…such a shame, have such great memories of the Mall I grew up in. 😉
“has now” excuse my typo.
In our area, the deterioration of malls started one year at Christmas time. Robberies and car jackings from mall parking lots. The closer the mall was to a freeway, the more frequent it happened. That was 10 or twelve years ago, and mall popularity waned for on line purchases.
In the UK they have this thing called “council housing.” Convert malls into low-income residential.
Hard to see how this could be economical. Better to demolish and start fresh.
Council housing exists because Hitler and the Nazis bombed Britain into a pile of rubble. I hope the Chinese don’t do that to us.
Nope, that’s a massively error-strewn interpretation of reality. Council housing started in 1919 as a result of the Housing Act. I can assure you the Kaiser and his tiny fleet of Zeppelins didn’t make a noticeable dent on the housing stock.
However, council housing has been on constant decline since the 1980s when Thatcher decided to sell them at less than half price and forbade councils from building replacements. It’s all housing associations now.
As for converting malls – that’s just the sort of accommodation everyone dreams about – a property with no external windows and nowhere for the kids to ride a bike.
Nope, council housing started with the Housing Act in 1919. The Kaiser and his tiny fleet of Zeppelins didn’t make much of a dent on the housing stock.
The demise began in the 1980s when Thatcher decided to sell them off at less than half price and forbade councils from replacing them.
As for converting malls to housing, that’s just the sort of accommodation everyone dreams about – no windows, nowhere for the kids to ride a bike and the local shops have all closed.
That is many stages away. First the malls have to go bankrupt. Then they have to reach the point where they have no economic value for any other purpose.
Malls are shuttering where I live, but it’s mostly because the owners want the tenants to leave because the land, including parking, is more valuable for condo/office development that it is as a mall. They purposely neglect the upkeep. Many have been sued successfully by store owners, but the store owners are in poor financial position and usually settle for far less then the awarded amount or they go bankrupt during appeal.
Is office development a big thing right now?
Probably not in the last 6 months or so, but this has been going on for years.
The closed GM plant near Wilmington, DE is being rebuilt as an Amazon distribution site.
They need to protect mall parking lots so when the NFL becomes a flag football league, they’ll have an economical place to play!
stage 1: sears goes bankrupt.
stage 2: amazon moves in.
stage 3: more retailers go bankrupt.
stage 4: amazon expands.
stage 5: all retailers dead.
stage 6: mall sold to amazon at a steep loss.
go out and buy $amzn now. it’s still not too late.
Stage 7: antitrust laws tightened, Amazon broken up? -:)
that’s just a charade. it will never happen.
That was said about the railroads, oil companies, steel mills and AT&T.
When empires are crumbling, leading to dramatic and unsustainable social/economic downturns, malls are, or will be, the first targets of the angry mob ! Democrats won t be able to turn the tide, quite the opposite !
God save the dip-n-dots.
I want what Ned Flanders is consuming. Angry mobs would be a huge increase in foot traffic for most malls.
You do make me wonder why we Americans bothered liberating Brussels in WWII.
the most dangerous mall in America https://www.youtube.com/watch?v=E-LNueq83G8&t=829s
Malls can be turned into warehouses for people who buy online and have things delivered to their homes.
There are most likely plenty of empty warehouses which could be easily converted to that. With all the crazy walls, stairways, escalators, HVAC systems and electrical services, converting a mall to anything would be a nightmare. That’s why they usually end up being demolished when they die.
My local mall is highlighted on the map. Sears is recently gone. JC Penney’s does well here, but…
Mall space that once was high profile stores that are easily recognizable have become places for mom and pop stores selling useless nick nacks and other junk in between empty store fronts.
Clearly it’s only a matter of time.
Don’t forget the other failing mall tenants: nail shops (at least 2) and some form of ethnic store that moved into a unit that was vacated by a national chain retailer with little to no renovation, repainting or carpeting.
Humm should convert them into apartments.
Good thinking. Why is nobody doing it?
They are in Brea, CA:
Including CAM, the rent is probably $70/square foot, so $2000 a month would buy you a 342 square foot apartment.
My guess is the malls here, or most of them, will weather the storm. As of July 2019, retail occupancy was reported to be 95.4%. COVID has hit retail hard, but I expect it to recover within a couple of years.
We’ve had two malls bite the dust over the last 20 years….one was already in trouble in the early 90’s and it went down with changing demographics, as the burbs to the north and west of it exploded with growth, and a new mall was built at the NW traffic hub.
I miss the one that closed….my kids used to skate there when they were little….I never did much shopping at the new one.
The second mall that closed, on the near north side, had become a hangout for big groups of back teenagers who apparently never bought much….. Sales declined and theft went up until the stores shuttered one by one. The community college has now taken most of the space.
Both buildings have mostly been occupied since the malls folded , but not at the typical nosebleed mall rents, of course.
Two new malls have been built in the last decade or so. The new ones are not the giant all-indoor things of the past…..they’re faux villages with wide sidewalks and awnings….
Austin was one of the last big cities to get H&M Stores….not sure if the five locations here are on the list, but H&M announced they’re closing 350 stores and opening 100 new ones. I’d expect them to keep a presence here….but I don’t think we need all of them.
I’d have to think hard to come up with any retail purchase I need to make that involves a mall at all….especially since Sears went down.
No. The US has way too much mall floor space in comparison to other countries. Retail floor space is in a secular downturn that will keep grinding on for a long time.
Covid didn’t start any new trends. It only accelerated existing trends, one of which was a shift from malls to online. After Covid, the trend will give up some of it’s accelerated advance, but not all of it. Some people who used to shop in malls will have discovered that they don’t miss them, and not go back. Within 5 years of so, we’ll be back where we are.
Personally, I haven’t purchased anything at an inside/covered mall in 30 years, so it doesn’t matter to me one way or the other. I suspect that the future, though, is going to be in smaller outside type malls, where you can park closer to the store you want, and where the rent and CAM is much less.
It’s going to be very interesting to see what happens between Thanksgiving and Christmas.
Schumpeter’s gale. How we conduct commerce is constantly changing
When you have a seasonal tenant (“Christmas Tree Shop”)?? as a major tenant, you know there is rot.
As far as I can tell, Macy’s is the only real anchor in the mall shown.
Macy’s in Delaware to become fulfillment center.
In the mid 1990s I was at a conference in Jupiter Beach, Florida, where the indication of the location of a restaurant that would have an open kitchen after 9 pm was 3 mall on the right, about 10 minutes away…What always surprises me has been the resilience of the mall over the past 30 years. There was always a surplus, bankruptcy is a way of life in North America (far more than elsewhere). Yet the over-abundance of malls persisted for 30 years.
They’re probably really expensive to tear down.
I also thought there was an element of graft/tax protection that was associated with the large build-out of malls? I haven’t really delved into it, so maybe I just heard blather. However, it always seemed to me that there was such a huge amount of building for such a limited return that I figured that there had to be other reasons behind the building than just the general development return.