“Anticipating Death Spirals”: Here’s Why Shopping Malls Are In Worse Shape Than You Think

“Anticipating Death Spirals”: Here’s Why Shopping Malls Are In Worse Shape Than You Think:

For the past several months, we’ve written frequently about the epic collapse of the centerpiece of the 1980’s retail model: the shopping mall.  With the growth of online sales finally starting to take a toll on brick-and-mortar retailers, shopping malls have faced a tidal wave of store closures and have been forced to backfill empty square footage with everything from libraries to doctors offices (see: America’s Desperate Mall Owners Turn To Grocers, Doctors & High Schools To Fill Empty Space).

Alas, a new report from property-research firm Green Street Advisors, which analyzed 950 mall locations over 2017, 230 of which were collateralized within commercial mortgage-backed securities (CMBS) loans, the financial troubles for American mall owners might be even worse than feared due to organic tenant losses from lease expirations. 

First, just to put the mall economic model into perspective, Green Street points out that while massive department store closures tend to dominate headlines, they represent a very small portion of mall income.  The real financial losses for mall owners come via the ancillary traffic impact on national and regional tenants which pay of the majority of mall lease income.

H/t reader squodgy:

“This shouldn’t be “NEWS”.
It should be called “Fulfilled Predictions”

We’ve been predicting it for four years at least, but QE delayed it.

My question is, as expenditure on non essentials dries up, and corporate earnings, yields and reserves shrink, will they realise that the customer actually IS king, and deserves more love?”

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