The Green Street Advisors Real Estate Agency predicts that more than half of the stores in U.S. shopping malls will close within the next 12 months.
According to analyst Vince Tibone, the years preceding the Coronavirus Pandemic were full of times when shopping centers may not be too worried about income, writes CNBC. But the Coronavirus pandemic, which weakened the U.S. economy, has created many serious problems for retailers who own store chains. And they are the anchor tenants for 60% of American malls.
Companies such as J.C. Penney, Macy's, Nordstrom, and Neiman Marcus are now facing many challenges. They have had many difficulties before, which have now been compounded by a significant drop in sales. It could lead to the bankruptcy of many of them and cause mass closings of retail outlets. However, J.C. Penney owns 850 stores across the country, which occupy 19% of the retail space. Macy's department stores account for 18% and Sears for 4%. And there is a high probability that more than half of them will close within the next 12 months. And that means serious trouble for the malls.
Shopping mall owners are already in a tense state, with several tenants like Gap not paying their rent during the pandemic. As a result, some landlords will not be able to pay their creditors in time and will have to stop operating. Massive closures can have even more disastrous consequences. And if companies like Simon Property Group have a certain safety margin, smaller shop owners may find themselves in an unenviable position.
According to Green Street Advisors, such a situation is for many years to come. And owners of shopping centers now need to adapt to the new conditions and accept the fact that in the future stores of various retailers will not be their primary source of income.