The Great American Mall. Most of us know it as the gleaming postmodern shopping temple of the ’70s, ’80s, and ’90s, pillared by mighty department stores, where worshippers laid their wallets on the altar and prayed to the gods of capitalism. But amidst the retail apocalypse of the past decade, those malls have been slowly disappearing—a cultural death now hastened by the global pandemic.
The COVID-19 economic crisis has already curtailed consumer spending, with department stores among the most devastated. The goal is simply to stay solvent, as Macy’s, J.C. Penney, Lord & Taylor, Nordstrom, and Neiman Marcus are all reportedly on the edge of bankruptcy (Sears already filed in 2018). And as real estate research firm Green Street Advisors explained to CNBC, if department stores start closing up shop, it could doom the malls they vacate as well.
No commercial tenant wants to lease space that resembles a ghost town. With department stores in malls gone, other retailers—such as Gap, Abercrombie, or Yogurtland—could use co-tenancy clauses within their contracts to demand rent relief or early lease breaks, due to the loss of anchor tenants that had pulled in foot traffic. This could then kick off a chain effect as tenants empty out, leaving malls largely lifeless.
We should be worried about this, since according to Green Street’s analysis, 50% of mall department stores could close by the end of 2021. Of the roughly 1,000 malls still in operation throughout the U.S., 60% are anchored by department stores; of those, 19% are rented by J.C. Penney, 18% by Macy’s, and 20% by other stores including Lord & Taylor, Nordstrom, and Dillard’s.
While a 50% elimination of mall department stores in the next year and a half seems on the high end, there may not be a way to prevent the eventual shuttering of the grand shopping malls of yore. Experts say it was inevitable, after all. Farewell to the days of strolling department store clothing racks, soft pretzels and cinnamon buns in hand.
This story has been updated to reflect the correct statistic from Green Street, which was misstated by CNBC.