(Source: Getty Images/fanjianhua)
Shopping malls were once the go-to place for American teenagers to
cause trouble hang with friends.
One reason is department store closures
Department stores often take on the role of “anchor properties,” or the largest, most prominent stores at a shopping mall.
JCPenney and Macy’s, 2 of the most common anchor tenants, have shuttered hundreds of stores since the start of the pandemic.
While this is a problem on its own, department store closures create 2 big problems for mall owners:
- Some malls offer co-tenancy clauses, which allow other retailers to get reduced rent if there are 2+ anchor property vacancies.
- Department store closures lead to less foot traffic for all retailers, which can accelerate other store closures.
This downward spiral affects everyone, even the biggest players. Case in point, 3 of the biggest mall landlords declared bankruptcy during the pandemic.
Not all malls are hurting
Strip malls have seen values pop 13% since the start of the pandemic.
But good luck finding a strip mall with the killer combo of Hot Topic, Claire’s, and Auntie Anne’s pretzels.
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