A sign of the times with the Covid and people’s different shopping,internet,Malls are taking a hit these days. In Lima Ohio one already closed over ten years ago and the other one is loosing another “anchor” store this Sunday, Macy’s. That leaves only Penney’s as the last big store and we know how good their doing these days. Interesting times indeed.The mall owners are talking Bankruptsy.

quote:

Originally posted by satch:
A sign of the times with the Covid and people’s different shopping,internet,Malls are taking a hit these days. In Lima Ohio one already closed over ten years ago and the other one is loosing another “anchor” store this Sunday, Macy’s. That leaves only Penney’s as the last big store and we know how good their doing these days. Interesting times indeed.The mall owners are talking Bankruptsy.

Malls were starting to struggle way before Covid, but Covid really hastened their demise. Same thing with movie theaters.

You will only see the very specialized and high end malls survive just like you’ll only see the specialized theaters like Alamo Drafthouse and Movie Tavern make it. Maybe.

I don't remember the last time I was in a mall, but it has to be at least 20 years ago. I hate malls.

And I only go into theaters that are in Casinos in Las Vegas, so I don't go very often.

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Malls going by the wayside

Maybe, maybe not.

From a Morningstar article today:

Back to the Malls: Demise of In-Person Shopping Exaggerated
We highlighted that the pandemic had accelerated the trend toward e-commerce--and we still continue to expect e-commerce to grow as a percentage of sales over time. Yet, as the pandemic subsides, whether it’s due to consumers’ demand for instant gratification, immediacy of need, or just the social aspect to in-store shopping, we expect that consumers will return to stores. The intensification of online retail sales has forced retailers with physical stores to accelerate the development of their own competitive online presence and merge it with their store base (known as "omnichannel").

What we have found is that in-store pickup has been highly popular during the pandemic, as it offers a speed of fulfillment unmatched by home delivery. In addition, many retailers have been focusing on revitalizing their physical presence to provide a combination of service, convenience, and experience that will bring shoppers back in the doors.

While we continue to expect that there will be changes in how real estate is utilized over time, we don’t think that the shopping mall is dead. The shift in purchasing habits will have a significant impact on the overall brick-and-mortar and mall-based retailers, but we expect that the worst impact will be concentrated among lower-quality malls. In recent years, malls have been moving away from relying on the power of their location and making their sites more “experiential”--for example, by revamping closed stores for use as restaurants, physicians’ offices, exercise facilities, and other experiences that cannot be replicated online.

Where there’s opportunity: We expect that over the long term, higher-end mall REITs such as 4-star rated Simon Property Group (SPG) and 5-star Macerich (MAC) will maintain their ability to drive foot traffic and, therefore, be able to both preserve their strong tenant base as well as attract e-tailers looking to establish a physical presence.

I like malls. I agree that they are dying though. Nothing like a semi fresh pretzel while strolling through overpriced retail. That is true but I still like walking the mall, even ending up at a theater eventually or a food court. Reminds me of better times.

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Originally posted by PASig:


Malls were starting to struggle way before Covid, but Covid really hastened their demise.
Same thing with movie theaters.

You will only see the very specialized and high end malls survive just like you’ll only see the specialized theaters like Alamo Drafthouse and Movie Tavern make it. Maybe.

Malls: WAY before the WU-VID. It is an evolution of the business model with their demise.

Movie Theaters: I think they will bounce back somewhat even with streaming and the advanced availability of content available from a plethora of sources. People still WANT to get out despite the Government's attempt to break our will for freedom with the tyrannical controls.

They've been going the way of the dodo (slowly) for a couple of decades now. The biggest mall in midtown is now a community college. OTOH, yeah, the ones in the wealthier parts of town seem to be getting by, which actually seems to be helping more upscale brick and mortar stores hang in there. Strange stuff compared to what we've been used to seeing.

This is nothing new, anybody paying attention to retail the last 20-years has seen the slow devolution of malls and department stores. Shopping habits have changed, online has evolved to be a more agile & responsive retail platform and COVID merely accelerated the downward slide. Land developers for these malls have provided nothing unique or, special for malls other than better parking and vehicle movement design. The retail storefronts for most malls is cookie-cutter, offering no differentiation from one mall/town to another; different mall, same stores. Consumers either want a lot of choices, which online is ideally suited for or, they want to specialized service which the majority of mall retailers don't offer. COVID forced mall owners to close (indoor spaces ) for an infinite amount of time ergo, all the retailers inside had to close as well.

Like movie theaters and music/record stores, malls as we currently know them, will be in our rearview mirror shortly. The flip side is, small & specialty retail continues to find resurgence as there are consumers that do value going into a small, local owned business, where the employees know what the hell they're talking about. They may not have the widest selection but, they have what you need and you trust their assortment. Trader Joe's is the largest example, local butcher shops, construction/hardware suppliers, have seen an uptick in consumers returning and valuing their business.

Our local mall is just a shadow of what it once was. I was just having this conversation with the guys in the barber shop yesterday morning. The employees at both JC Penny’s and Macey’s are under standing orders to do nothing to stop shoplifting....Don’t even call the police. One of the managers at Penny’s says that about twice a week a gang of people will just walk in, take a bunch of stuff, and walk out. It’s the same basic group of people. The employees know as soon as they come in the door what they are there for. Apparently, these companies say it is cheaper to do nothing...I don’t get it at all.

It used to be a respectable, and enjoyable place to shop. Now there are almost no stores I care about, and roaming groups of thugs running around. This won’t have a happy ending.

I too stopped going to malls and movie theaters at least 20 years ago. For me, malls here became a magnet for young troublemakers and it was not worth the hassle for me when there were other options for shopping. It has been a lot longer since I sat in a movie theater. When I watch a movie I don't want to have people tight next to me, people talking, kicking the back of my seat and unable to see around them in front. Also, I want to pause the movie to pee or to get a beverage or snack.

Might be some increase in mall traffic as people look for more and more places to go, be nice to see the one near us come back, its lost Macys and Sears, just one Anchor left.

Word is it's going to be rebuilt/replaced by a retirement community...

I came to this town to attend college in 65. A new mall was under construction and I had never seen such a thing. Taking a young lady to the mall was a cheap date and a chance to see if it was worth investing more time and or money.

Over the years, we bought a lot of things at the mall. One of the bigger dept stores even had a very nice gun department. There was a theater and a Walgreens with the cheapest beer and liquor in town. We lived in a mobile home after the Army and the mall was shelter in case of stormy weather.

I have now watched the mall die after 57 years. Shopping habits change along with the times.

I wonder how much of malls' troubles are of their own making?

There used to be a nice mall not far from us. Then somebody opened a new mega-mall about ten miles away or so. For various reasons that destroyed "our" mall. It was finally demolished last year.

The new mall is soulless. We hate it. The only time we go there is if a store has something in particular we want or need. Then we park as close as we can to that store, get in and get out.

The old mall we'd walk around and see what else there was to see. And we went there fairly often. Often we'd enjoy lunch or dinner at one of the restaurants adjacent to it. Now only one of those restaurants is still there, and we haven't been to it in years.

Stopped by one recently, specifically because of the Target store that happened to be there. I later wound up roaming the connecting mall for a few minutes...very sad what I saw and experienced. Aside from Target all of the rest of the shops I peeked in looked like they were about to call it a life, including the only other anchor, Macy's. Sad indeed, but not surprising given the times and changed shopping habits. I don't see any relief for most of these places, now that consumers have had a taste of the convenience that online buying brings. Around here it's normally agony being on the roads, aside from a short window during the height of Rona where most everything was on lockdown. That painful time in the car to and from alone makes online shopping seem like pure bliss.

i'LL JUST LEAVE THIS HERE.

Link


Mall Values Plunge 60% After Reappraisals Triggered by Bad Debt

U.S. mall values plunged an average 60% after appraisals in 2020, a sign of more pain to come for retail properties even as the economy emerges from pandemic-enforced lockdowns.


About $4 billion in value was erased from 118 retail-anchored properties with commercial mortgage-backed securities debt after reappraisals triggered by payment delinquencies, defaults or foreclosures, according to data compiled by Bloomberg.

That average drop -- which reflects the change in value since the debt was originated years ago -- may underestimate losses when the properties come up for sale because so much retail real estate is in distress. And few buyers are willing to take risks on aging shopping centers as e-commerce continues to grab market share.

“It’s an eye-popping decline,” Gwen Roush, an analyst with DBRS Morningstar rating service who tracks commercial real estate, said in an interview. “When we’re forecasting a loss on these malls, we’re even further haircutting that value.”

The biggest owners, such as Simon Property Group Inc., Brookfield Asset Management Inc. and Starwood Capital Group, have started to triage properties, walking away from money-losers while reinvesting in viable locations.


Hard-hit centers were already decimated by department store bankruptcies and high vacancy rates, before Covid-19 accelerated Americans’ taste for online shopping. Vaccines and herd immunity are unlikely to lure visitors back to deserted gallerias perfumed with Cinnabon bakery treats.

Quality Gap
Only about half of the 1,100 U.S. indoor malls have a good chance of survival, according to Floris van Dijkum, a real estate analyst with Compass Point Research & Trading. The strong will get stronger while the weakest face abandonment, he said.

“There’s a huge bifurcation between good and bad quality,” van Dijkum said. “By value, 80% is in the top 300 malls.”

Simon, the country’s largest mall owner, is working with loan managers to restructure debt on underperforming centers or hand back the keys.

“Hope to make deals in some,” Chief Executive Officer David Simon said on the company’s latest earnings call. “If not, then they will no longer be part of our portfolio and we wish that new owner the best of luck.”

BIGGEST LOSERS
Owner Shopping Center 2020 Appraisal Decrease
Kushner Cos. 229 W. 43rd St. $92.5 million -$377.5 million
CBL & Associates Properties Triangle Town Center $27.7 million -$257.3 million
Simon Property Group Town Center at Cobb $130.4 million -$191.6 million
Pyramid Management Group Poughkeepsie Galleria $68.6 million -$168.5 million
Simon Property Group Square One Mall $50.5 million -$150.5 million
Source: Bloomberg CMBS data
Outside Atlanta, Simon’s Town Center at Cobb, once appraised at $322 million, received no bids at a courthouse foreclosure auction in February, according to a local news report. The company’s Montgomery Mall, near Philadelphia, was appraised at $61 million last year, a 69% drop from its 2014 value.

For the few malls that sold, prices were down just 1.8% in January from a year earlier, data from Real Capital Analytics Inc. show. That’s because most of what traded was high-quality, according to Jim Costello, senior vice president at the research firm.

Awaiting Recovery
Some mall sellers are waiting for the economy to recover before unloading properties, hoping for higher prices.


Unibail-Rodamco-Westfield, owner of 37 U.S. shopping centers, said in its fourth-quarter earnings statement that it’s looking to 2022 to “significantly reduce our financial exposure to the U.S. when the investment market reopens.”

For many lower-end centers, the value is the land minus the cost of demolition, according to Costello.

“The orange tile and brown carpeting is just going to be torn down and plowed under and eventually trade at a price someone can build something else there,” he said.

Several mall operators have sought to escape their debt burdens while vacancies rise and tenants withhold rents. Washington Prime Group Inc. skipped a February interest payment and hired restructuring advisers. Pennsylvania Real Estate Investment Trust and CBL & Associates Properties Inc. filed for bankruptcy last year.

Debt management on about 17% of retail properties with CMBS loans has been transferred to workout specialists because of delinquencies or other financial issues, second only to hospitality properties, with 24.5% in special servicing, data from Trepp show.

Rating services have downgraded hundreds of bond tranches, many of them on mall debt, as concern rises that investors won’t get repaid, according to Roy Chun, senior managing director at Kroll Bond Rating Agency. It’s only a matter of time before the money stops flowing, he said.

“It’s the sixth or seventh inning of a game,” Chun said. “But you already know the winner and the loser.”

Seems like strip centers are the current trend for retail. Without the large interior commons they are less expensive to build and rent. Also malls often became baby sitters, parent would drop off the kids where they met with others to run amok.

I only went to my local mall once or twice a year. But now the store I went to for my wifes perfume, etc is also in another shopping block closer to home and the Gamestop is gone and Auntie Anns pretzels, I doubt I will ever darken its door again.

Not much left inside it anyway, bunch of overpriced jewelry stores and clothes for teenagers.

I know two of the malls in Henrico are being torn apart and remodeled to more of an open air feel.

The one at Willow Lawn was a haven for the less desire able clientele. It was on its last legs when an real estate firm came in, revamped it and turned it into an open air mall. Now it is thriving with lots of neat shops, restaurants etc..

This was in the mid 2000's and the one mall in Henrico was nothing but hood rats.

When I lived in Kannapolis I would go to that mall and walk around to kill the morning after I got off work. It was nothing great but to me it was relaxing.

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Originally posted by ensigmatic:
I wonder how much of malls' troubles are of their own making?

I'd say maybe .... zero!

What are they supposed to do?
High overhead costs need high markup and margins to pay for them.
Unless it something of an entertainment nature like movies, theatres, bars, restaurants or perhaps educational in person classes the need for the "mall concept" is negated.
Just to get everyday merchandise the demand to go in is almost non-existant.
There are some everyday items but the business is gobbled up with the large box stores like Walmart, Lowes, etc.
SMB's are the hardest hit.
Sure I miss the old time shopping but like Record Stores (I really miss them) times have changed.
You just have to adapt.

My favorite part of mall shopping was sitting and people watching.