What Options Do Mall Landlords Have When Brick & Mortar Retail Melts Down on Them? | Wolf Street
Mall investors have long denied it. But year after year, ecommerce has been eating up brick-and-mortar retail sales, in the third quarter faster than ever, and in the fourth quarter, according to early indications, even faster. Turns out, ecommerce is a structural change that grew out of the arrival of the Internet, has been underway for two decades, and will continue until it has played out.
Sure, malls are not all going to be shuttered overnight. But many of them have already been turned into zombie malls; and others that are located on good locations are being redeveloped into office and apartment buildings with some retail and restaurant space, along with movie theaters, and other entertainment venues.
One of the big issues for malls is that department stores that anchor them are being closed, either because retailers are reducing their brick-and-mortar footprint as they switch to ecommerce, such as Macy’s; or because retailers are getting dismembered in bankruptcy court, such as Sears; or because retailers are now moseying over to the nearest bankruptcy court, such as J.C. Penney. If a mall is anchored by two department stores and they both close, it’s fiendishly hard to maintain the mall as a mall.