Shopping malls in the U.S. were already in decline before the Covid-19 pandemic as consumers shifted away from traditional brick-and-mortar stores to e-commerce. The outbreak has only exacerbated the challenges at malls as social distancing has placed restrictions on stores, movie theaters and restaurants. So what will become of malls in America after the pandemic ends?
Shopping malls across the U.S. have been reeling as restaurant and retail tenants struggle to keep their doors open.
Data compiled by Coresight Research shows about a quarter of U.S. malls could close over the next three to five years, accelerating a trend that began before the pandemic.
Simon Property Group — the nation’s biggest mall owner — said earlier this month that its fourth-quarter revenue dropped by 24% on a year-over-year basis to $1.1 billion.
However, some analysts think Simon — with its portfolio of A-rated malls and a healthy balance sheet — will benefit as distressed malls operated by its rivals close their doors. The company is also expected to see gains from new additions like hotels and luxury residences.
“Unfortunately there are a lot of centers that don’t fit that high profile and that have lost their competitive edge,” said Piper Sandler analyst Alexander Goldfarb. “The thing about Simon is they’ve been really focused on maintaining it, and that’s both been through a combination of culling the lower productive centers as well as making sure that they keep investing in their top centers.”
Simon Property Group CEO David Simon said the company is also getting a lift from increasing traffic at some of its locations and from tenants paying their rent on time.
Malls are a big tax driver for the communities they serve and employ lots of people locally. Watch the video above to find out more about the struggles U.S. malls face and what could become of them after the pandemic ends.
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Why U.S. Malls Are Disappearing