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Shopping Malls of America - only the strongest will survive



Smaller mall owners will most likely not survive the problems and start closing down en masse.

Shopping Mall - Pexels

The problems of American shopping malls began even before the pandemic. Active online commerce inevitably affected physical stores, leading to a reduction in their numbers. But it wasn't that visible, and it could take years before mall owners started to experience problems. The coronavirus pandemic was a catalyst that significantly accelerated the slow process.

In August 2020, Coresight Research conducted a particular study to assess American shopping malls' current situation. The verdict is disappointing - almost a quarter of malls in the country may close very shortly. But how will this affect the whole situation?

It is suggested that the largest owner of shopping centers in the country, Simon Property Group, can only benefit from the current situation. Simon Property Group has also fallen on hard times. Its report filed in February showed that its revenue in the fourth quarter of the fiscal year declined 24% YoY to $1.1 billion. Overall, however, Simon Property is doing much better than its smaller competitors.

Simon Property's main competitive advantage is its impressive portfolio of A-rated malls. These shopping malls are an essential benchmark to monitor in the retail real estate industry because they account for most of the value of malls in the United States. There are about 250 of them, which is a quarter of the total number of malls in the country. On average, these malls bring in $750 in sales per square foot, which is lower compared to "A++" malls with their $1,100 but much better compared to "B" establishments ($425 per square foot) and "C" establishments ($250).

Low-rated malls clearly can't compete with the higher-rated ones and will close. And that will be to Simon Property's advantage as the number of competitors dwindles. The company chose a strategy that implied the development of highly-rated malls and rejection of "weak" ones. The company appreciated the importance of e-commerce a long time ago. It started actively working in this direction in 2019, developing a variety of projects. Simon Property is also expected to profit from the construction of new residences and hotels in the future.

Add to that the fact that Simon Property Group CEO David Simon recently said the company is slowly recovering. Amid the easing of restrictions, shoppers return to its shopping centers, and tenants pay their rents on time again. A general vaccination will probably revive this market too. However, we should not expect things to go back to normal anytime soon, either. Moreover, there is a high probability that it will never be the same again.

What is happening today is much more severe than the global financial crisis of 2008, after the end of which the shopping malls recovered relatively quickly. The coronavirus pandemic was a challenging test, and not everyone will be able to survive. The current situation shows that in the future, only the strongest will stay in the mall market. And it won't be just in the American market.

More about shopping malls in the USA



Jun 10, 2021, USA:
The National Retail Federation predicts the market will experience the kind of rapid growth "the country hasn't seen since 1984.
Jun 9, 2021, USA:
Several Microsoft experience centers leftover from what was once a large chain of stores will offer more information and the opportunity to buy the company's technology.
Jun 7, 2021, USA:
The billionaire announced that he would fly into space on his own company's ship. The estimated date of flight is July 20th.
Jun 4, 2021, USA:
The three-level retail space in New York City spans about 2,000 square meters.
Jun 4, 2021, USA:
A mall owner has sued Victoria's Secret, saying the company closed the store without paying rent.
Jun 3, 2021, USA:
The company is entering a new market in hopes of recovering from the pandemic.
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