Economic Crisis Slaps North American Malls

Reis.com is a New York based company that analyzes U.S. real estate trends. Reis indicated that the country’s mall sector has not surprisingly shrunk by 8.2 million square feet in the 2009’s first quarter equaling the total shrink in 2008 alone. This was the largest single quarter decline Reis has ever recorded since the 1980’s.

This was sort of expected, given that the United States second largest mall developer, General Growth Properties Inc. declared bankruptcy at the same time as this report was released. The company with has $30 billion USD in mall assets, said it owed too much money to keep going in its present structure.

As more and more retailers face customer shortages, more malls are closing worrying executives. It was reported that in March alone, Americans spent 1.1% less in retail stores compared to February with a decline expected to continue. These lower sales and tougher economic times seem to have rendered in poorer financial results for mall developers nationwide.

Canada had 2,425 malls in 2007 with over 448.8 million square feet of retail space. The selling space only increased by 9% since 2004, implying that Canada might have already been saturated with malls even before the 2008 recession hit. Reis is not expecting a turnaround in North American results for a few months at least with company representatives stating that “the near-term future of retail space remains filled with daunting challenges”.