Business

Say goodbye to the shopping mall

Nearly half of all shopping malls in the US are on a downslide and a good many of those could close in the next few years, according to a report out Monday.

The report, from Morningstar Credit Ratings, found that about 45 percent, or 465, of the 1,035 malls across America have weak sales, decreasing occupancy and one or more anchor-store vacancies.

On the flip side, 29 percent of US malls were considered top-notch, according to Steve Jellinek, the author of the report.

The mauling of the malls is the result of consumers doing more purchasing online and spending less on apparel.

On the flip side, there are just 300 top malls, mostly in affluent areas that count among their tenants Bloomingdales, Neiman Marcus, Saks Fifth Avenue or Nordstrom. Those stores generate sales of $470 or more per square foot, according to the report, which used Green Street Advisors data.

Another 273 malls, the report found, have respectable per-square-foot sales of $400 or more. Of the 465 weak malls across the country 232 are particularly vulnerable, with sales below $300 per square foot and are at the greatest risk of closing.

Included in the 465 malls are 24 that are not making enough money to pay their debt and are on a default watch list, Morningstar says, as well as another 53 that are in default.

“The question is what happens to the malls in the mid-tier range,” said Lea Overby, managing director of research for Morningstar. “Those are the ones we are most concerned about.”

Among the most vulnerable malls are 100 that have Macy’s, JCPenney and Sears, all of which are aggressively closing stores.

This bleak outlook doesn’t jibe with the International Council of Shopping Centers’ take on the industry.
The malls’ trade group is forecasting a 3.3 percent increase in sales this holiday season and says that rents have risen by 2.6 percent in the first two quarters this year.

Occupancy through June this year was at 94 percent or flat with the previous two years, according to ICSC.