Facts and figures from Michael F. McElroy’s “The Economics (and Nostalgia) of Dead Malls,” New York Times, Jan. 3, 2015:
- Since 2010, more than two dozen enclosed shopping malls have been closed, and an additional 60 are on the brink, according to Green Street Advisors that tracks the mall industry.
- Almost one-fifth of America’s enclosed malls have vacancy rates of 10% or greater, considered troubling by real estate experts. Nearly 15% are 10 to 40% vacant, up from 5% in 2006.
- 3.4% of malls are considered to be dying — with 40% vacancies or higher. That is up from less than 1% in 2006.
- About 80% of the country’s 1,200 malls are considered healthy, reporting vacancy rates of 10% or less. But that compares with 94% in 2006.
- U.S. malls are bifurcating: With income inequality continuing to widen, high-end malls are thriving, even as stolid retail chains like Sears, Kmart and J. C. Penney falter, taking the middle- and working-class malls they anchored with them. Green Street senior analyst D. J. Busch: Americans will keep going to malls “aimed at the top 5% or 10% of consumers. But there’s been very little income growth in the belly of the economy.”
Causes of the death of malls:
- It’s not the Internet: Online shopping is only a small reason for dying malls, experts say. Less than 10% of retail sales take place online, and those sales tend to hit big-box stores harder, rather than the fashion chains and other specialty retailers in enclosed malls.
- The fundamental problem for malls is a glut of stores in many parts of the country, the result of a long boom in building retail space of all kinds. “We are extremely over-retailed,” said Christopher Zahas, a real estate economist and urban planner in Portland, Ore. “Filling a million square feet is a tall order.”
- “I have no doubt some malls will survive, but major segments of our society have gotten sick of them,” said Mark Hinshaw, a Seattle architect, urban planner and author.
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