Report: 1 in 4 Malls to Shutter by 2022

Print Friendly, PDF & Email

As retailers have finally come to the realization that they’re drowning in square footage, news of store closures floods the headlines. With changes like these, there will be inevitable ripple effects. Though in the cased of malls, what may result will be more like a tsunami.

This bleak forecast comes courtesy of Credit Suisse, which in a research note yesterday, pronounced that up to a quarter of existing shopping centers won’t survive beyond 2022. That’s 275 locations, according to Fortune magazine.

That number seems high but it shouldn’t come as a surprise since Credit Suisse estimates that 8,640 stores will close in 2017. That’s more than four times more than last year and 2,477 more than in 2008 in the midst of the great recession. Just add them up: 100 for Macy’s, up to 800 for Payless, 125 at Michael Kors, 108 for Kmart, 160 for Gander Mountain and the list goes on…

photo credit: Credit Suisse

At the same time online shopping is doing its part to relegate these locations to relics. The firm predicted apparel sales will balloon from 17 percent of all e-commerce sales to 35 percent by 2030.

Though the commercial real estate industry has been putting a sunny face on its collective preparedness—anchors are becoming gyms! Storefronts are transforming into restaurants—its hard to imagine how all of this space will be repurposed in just 5 years. That said, some have been using the rash of closures and bankruptcies to oust low paying tenants in favor of businesses from which they can demand more.

(Read more about how mall owners are planning to weather the storm: Don’t Write That Retail Obit Yet)

And some property owners have more of a challenge than others. The credit agency highlights Simon Property Group and General Growth Properties as two of the once that have long since exited vulnerable B and C properties. Today each enjoy at least 96 percent occupancy.

With 11 and 12 percent respective occupancy rates in weak malls, Macy’s and JC Penney have the most exposure, Credit Suisse noted.


Recent News

Business Analysts’ Top 10 Economic Predictions for 2018 Show Positive Signs

The global economy will expand in 2018, matching the rate of growth achieved in 2017 and marking the first time since 2011 that global growth topped 3 percent, according to an annual forecast by business information provider IHS Markit.

This content is for Annual, Monthly and Limited members only. You can read up to five free articles each month with a Limited Level Subscription. Please log in, or register.
Log In Register
Read more

Shuffle Board: Macy’s Loses Executive Chairman, Nike Ramps Up Digital & Retail Team

Terry Lundgren, Macy’s executive chairman, is retiring from the company’s board, plus Nike added two new executives to elevate its digital and retail teams.

This content is for Annual, Monthly and Limited members only. You can read up to five free articles each month with a Limited Level Subscription. Please log in, or register.
Log In Register
Read more

Report: Only 8% of Retailers Are Maximizing Ominichannel’s Promise

Omnichannel is more than just a buzzword—it's a necessary strategy for survival but too many retailers are struggling amid the current retail turmoil to keep up with consumer demands for a seamless experience.

This content is for Annual, Monthly and Limited members only. You can read up to five free articles each month with a Limited Level Subscription. Please log in, or register.
Log In Register
Read more