In the 2010s, mall owners had to navigate the growth of Apple's iPhone, Amazon's ascent and department stores' demise, among other structural shifts across the retail industry.
The real malaise for mall operators set in around 2015 and 2016 as department store operators' struggles were becoming clearer. Retailers like Macy's and Sears had long been considered the anchor tenants at malls. Everything else — like, Sbarro pizza, Auntie Anne's pretzels and Build A Bear Workshops — filled in the middle. Department stores, which can span upwards of 100,000 square feet per location, were long tasked with driving traffic and pulling shoppers in from the outside.
In August 2016, Macy's announced it was going to close 100 locations, with the company looking to turn around its poor performance. And J.C. Penney in February 2017 said it would be closing up to 140 locations in the spring, or roughly 14% of the company's locations, as sales continued to fall. Sears' troubles were also intensifying.
Within the roughly 1,110 malls in the U.S., 80% of "mall value" is at properties rated A- to A++, Green Street says. That's where the sales are happening. Those malls are considered to be the dominant centers in their respective markets, with either luxury or high-end tenants surrounded by shoppers ready to spend. They also see a good number of tourists.
Amazon has already moved into a new distribution facility where Randall Park Mall used to sit in North Randall, Ohio. It is also taking over Euclid Square Mall in Euclid, Ohio."I think right now there is a huge abyss between the haves and the have-nots," said Mark Toro, a managing partner in Atlanta of real estate developer North American Properties. "Right now the fortress mall is going to outperform all the others.
Apparel retailers used to make up as much as 60% of leaseable square footage at a traditional shopping mall. But today that can fall closer to 25% at some properties.
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