Shopping malls empty out
Recession aftershocks send vacancies to their highest level in more than a decade.
This spring has seen mall vacancies hit their highest level in 11 years, The Wall Street Journal reports. The vacancy rate is a surprisingly high 9.1%. The situation is really miserable at strip malls, where the vacancy is forecast to surpass 11% later this year -- the highest level in 21 years.
Luckily, major mall operators like Simon Property Group (SPG) and Taubman Centers (TCO) have managed to escape this downward spiral. The real problem, the Journal reports, lies in those strip malls that were built in the suburbs during the housing boom. Builders thought houses were coming, so they got out first with sprawling retail sites in developing neighborhoods.
A fine idea, but then the financial crisis hit and all those housing plans ground to a halt. That left a lot of empty storefronts in neighborhoods that never lived up to their potential.
There's another problem. In the past, many of those neighborhood malls did well with a big anchor store, something like a Borders bookstore or a Blockbuster. Both of those chains went into bankruptcy. And remember Mervyn's? I still see floundering shopping centers around the country with an empty Mervyn's space in the middle of them.
Another once-dependable anchor store was Best Buy (BBY), which is in its own identity crisis after losing significant business to places like Wal-Mart (WMT) and Target (TGT).
So can neighborhood shopping centers survive without those anchors? Well, there's one more big problem they're facing: The Internet. Online shopping is a serious threat, accounting for 12% of total spending over the holidays, the Journal reports.
"We will hit a tipping point soon, if we have not already, where online will become so mainstream that retailers will wonder what they need some of these big boxes for, when you have a retail presence in everyone's pocket via your smartphone," one retail analyst told the newspaper.
This is a major change in American culture as well. Losing the shopping mall -- even the smaller strip malls -- removes yet another meeting place and neighborhood center. Already, some cities are turning empty malls into offices and homes. Those are better uses for the land, no doubt, but a little identity disappears along the way.
The "Ripple effect". As businesses leave the Malls, mall owners raise the rent on those who are left. Kind of like what the government is trying to do with those of us who have a job and or something to tax us on. As time goes on and our personal wealth and or operating capitol diminishes we too close down and walk away. The "Ripple effect".
Another example; Boeing aircraft Long Beach Ca. This facility which use to belong to McDonnell Douglas aircraft is building the last of the C-17 military airlifters. There are presently 6500 employee work on 3 shifts. When they shut down in the next year or so, there will be a tremendous impact in this community. Mostly gas stations and food services. 60 percent of the employees live in Orange county. But people buy gas in Long Beach area and purchase lunches and dinners too. Eventually these businesses will have to adjust. Probably close down too. "Ripple effect:.
To be sure though our government has it all under control.
The mall owners are crazy. They tell the stores within their walls, what times to be open or pay insane fines for each hour they are not open. The company which owns the mall in my city charges $500 a hour for NOT being open when the mall says to be open. Does Hot Topic really gain anything by being open at 10 a.m. on a school day? Our mall owners will chase away any *ma-n-pa shop* by moving them from one location to another with no notice. They want corporate chain stores only inside their mall. YAWN. Boring.
Our city has a *local boy* married to a wealthy daughter of a supercenter retail GIANT and he builds little strip malls all over our city. All the good stores from the mall are moving into these strip malls where you park just outside the door of the actual store you want to visit. The space rents are cheaper than the Mall as well. The stores are open when THEY choose to be open without any fines. Customers can get in, shop, and get home faster from the strip malls than from the Mall.
The 1980's are finished and shopping is no longer an *activity* to occupy your weekend......we now have the internet to provide us with hours of mindless fun....so why waste the day away roaming at the Mall.
Rather have a mall than a walmart but if we can shut down both maybe the downtown personal experience will make a come back.
uh... when did going to a plain vanilla Target that looked the same in houston as it does in Indianapolis or Charleston become part of my neighborhood identiy or meeting place? I don't seem to recall having cozy visits at Kohls or Dicks Sporting Goods with my friends and neighbors in recent times. Walmart though I'll give you as it looks like we are ALL destined to end up there as customers/employees or both.
The Dinosaurs here are the mall managers. First "Circuit City" asks for lease reductions, they didn't get them so they went bankrupt and now show up on the internet only. Borders isn't far behind.
The mall managers demand a base fee and usually a 7% of sales. This fee has to go down to 3% to reflect the internet "store fronts" that they compete with. The mall managers have refused to lower rents because they need to have junior continue to go to high price private schools.
Well the party is over, and the malls are heading to the neighborhood tar pit. Good riddance (I speak from first hand experience from a brother in the industry, who frankly doesn't give a rip about the store owners, he is just concerned about the rent checks being received timely, and just cuts back on servicing the mall so he can keep making his due payments. It's all sick it's worse than the government.)
People have no money and can't find decent work for decent wages. Malls have been over built everywhere, there's too many of them and now that the bubble has burst (the financial bubble, you know, printed or electronic money that has no value) there's no need for so many of them.
Let them close and bulldoze them over. They're wasted space anyway, remnants of a debt fueled economy that can no longer be maintained or supported.
bigger malls in my area (east coast FL) aren't doing too badly. It 's suburban strip malls that are really empty. When I moved here 10 years ago (from Canada) I couldn't believe the number of suburban strip malls there were down here - on just about every corner. And that I believe is the problem - there's just too many of them.
The suburban strip malls mostly don't have a big anchor, just a collection of small mom and pops and maybe a sportsbar. When the economy went south, so did alot of those mom and pops. Now we have 2/3 empty strip malls and nobody wants to start up new businesses there.
So... 88% of shopping is still done at stores? 88%!
Maybe mall stores/ strip mall stores should have better advertising and merchandise available to remain competitive with the discount super chains.
Looks like another alarmist article, the last paragraph needs to say "Bulldoze the empty buildings and make a park for people to gather."
Nothing to see here, move along people....
I'm not too concerned about whatever vague "identity" my town has gotten from it's strip malls and shopping malls. As those shopping centers fail, our long-suffering downtown core is coming back to life. That's as it should be, in my opinion. I'd rather my town be known as one with a thriving central business district but a lot of vacant or re-purposed shopping malls on the fringes, than one with thriving peripheral shopping centers but a dead downtown (which is exactly what we had been since most of the shopping centers opened or expanded, way back in the 80's). I don't like the idea of a huge cluster of vacant buildings just sitting around unused, either, but if other uses can be found for them, I think everyone wins...except perhaps the people who own the malls right now. Even THEY might come out ahead, considering current vacancy rates...
Ok malls are good for?........Kids! And extensively rich older people who want to impress by purchasing name brands. Go into a 'Macy's' and you will be paying upwards of $60 for a 'Polo' buttondown. Shop online and you may pay less with No shipping. Skip the crowd and the parking lots and the LOONG walk to the store and it will be a no-brainer. The reason this makes news is because Retailers and landlords are crying for money.
Ever try finding a parking spot on Black Friday at a mall? HEHEHE! Then you know what I am talking about. Malls are for people who want to 'appear' wealthy without having any fricking money.
the last paragraph needs to say "Bulldoze the empty buildings and make a park for people to gather."
Excellent idea T.O.T.P.!
Our economy and culture continues to evolve. Do any of you remember when going downtown to the big retail stores was the thing to do. Most who post here and read this are probably too young. The downtown retail shops closed up when people moved to teh suburbs and started shopping in the Big malls. The Big Malls started suffering when strip malls started appearing everwhere. It is evolutionionary. The internet has brought about a new paradigm and now people like Kim Parsons are making a living talking about the inevitable. If you want to know what shopping will look like in the future ask your teenagers where they like to buy thing goods and consider the answers carefully. If you have money invested with Shopping Malls and strip malls I suggest you take it out and invest it elsewhere.
It is rare I go to a mall of any sort and wonder at the wisdom of the planning. There are some that center around an attraction or area that humans actually find pleasure in spending time at.
But really, from what I hear - if you want to do well as a mall, you just need to make one that caters to the people with the money. You know, that 2% of Americans that make 50% of America's income. Call it the Millionaire Mall and require a bank balance of at least a million for entry. At least the stores will be targeting the people who aren't living in hard times.
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