Will the pandemic spell the end for U.S. malls?
As they gradually reopen, U.S. shopping malls are requiring masks and implementing social distancing policies. But there are growing concerns the pandemic could spell the end for mall shopping altogether.
And Macys has projected a first-quarter loss of around US $1 billion (CAD $1.4 billion), suggesting more belt-tightening for a mall anchor store that already announced 125 store closures in February even before the coronavirus crisis.The retail industry was struggling long before COVID-19 hit, weeding out brick-and-mortar stores that were steadily losing market share to e-commerce, and that spawned a wave of mall closures and the appearance of "zombie malls" with almost no stores.
Analysts expect those trends to accelerate."Covid is pulling forward several years of retailer fallout," Green Street Advisors said in a report, predicting more than half of mall-based department stores would close by 2021.That report was published April 28, just ahead of bankruptcy announcements by J. Crew, Neiman Marcus and JC Penney.
With more than 800 stores, JC Penney has been an especially important presence at U.S. malls. Most of the locations are expected to shut down as the company reorganizes.WAVE OF LITIGATION?Aside from the immediate financial hit from the loss of stores, malls face another drag from "co-tenancy" clauses in many leases that permit secondary mall tenants to demand rent relief when a shopping center loses multiple anchor stores.
And renters also could cite "force majeure" or "Act of God" clauses in many contracts to justify non-payment of rent, potentially leading to a huge wave of litigation.Retail Properties of America, a Maryland-based real estate investment trust that owns more than 100 shopping centers and malls, collected just 52 percent of its April rent, including less than 10 percent from apparel chains, book stores and movie theaters.
Shane Garrison, chief operating officer for RPAI, said the company is discussing short-term lease modifications on a tenant-by-tenant basis with restaurants -- another industry with an uncertain outlook."To the extent that they are willing to put that foot forward and be transparent and help us understand the scope of the ask, we're certainly willing to listen," Garrison said on a May 6 earnings conference call.
"To the extent they are not, we really question viability," he said.Acadia Realty Trust, a New York based mall operator, received about 50 percent of its April rent, with "essential" stores such as Target and Trader Joe's able to pay.
The other 50 percent includes a number of up-and-coming brands like hip eyeglasses chain Warby Parker that are "young but exciting," said Chief Executive Kenneth Bernstein, who estimated that only five to 10 percent of the portfolio were weak "watch list" tenants.
"We're finding most retailers to be realistic and reasonable," Bernstein said in a conference call this month.WILL CONSUMERS CONSUME?Nick Shields, a senior analyst at research consultancy Third Bridge, predicted many second- and third-tier U.S. malls will not survive the current crisis.
Better-rated malls with popular brands like Apple and Nike will do better, he predicted, though the hit to real estate companies from lost rent will be "significant."Once the economy reopens, analysts expect stores to benefit somewhat from pent-up demand from consumers who have been shut at home.
But navigating through a largely empty mall with many closed stores amid an omnipresence of masks and the smell of bleach may put off some shoppers."The big question is whether consumers are going to be willing to go back into a large inside facility anytime soon," Shields said, and it could be months or longer before consumers feel comfortable stepping into a dressing room.
Sales at Mignon Faget's three Louisiana mall stores have been slower than usual since reopening earlier this month, said Chief Operating Officer Maghan Oroszi.The New Orleans jeweler has managed to offset the hit from lost brick-and-mortar sales through a spike in online sales, while a forgivable loan under the government's Paycheck Protection Program has helped it stay current on rent, Oroszi said.
But the dimming employment picture has sharpened questions about whether the company needs as much of a brick-and-mortar presence."Is there going to be another wave of economic impacts?" Oroszi said. "We may not need to so many physical stores to be able to survive."Read more: CTV News »
If the media blows it out proportion, yes Poor ctv....not one scandal in pmo to be found to report on, eh. Ah, pity. Stop this fear monger. We need retail. Would be nice to say something positive. So tired of media crap Fake news No, if we can go to Walmart then we can go to malls too What makes you idiots at CTV think yur situation is any better , wtf CTV , stick to yur own problems
This is all about control and ending any privacy we have left. The powers that be want everything online and cashless so they can track every move we make. truly disgusting. People ned to wake up from their stupor and fight back Please stop it with your incessant fear mongering . Where has all the true investigative reported gone?
I’m convinced this is what’s going on, insufficient UV light penetrating through greenhouse gas emissions.... Could Ultra Violet lighting be an option? Continuously disinfecting the stores at night when everything closed? UV light kills pathogens in a water treatment plant Fakenews This pandemic hopefully teaches ppl to practice personal hygiene cause ur home bored the whole time. 6 feels good for bubble boy. Don't have to smell the unclean and catch head lice. As for COvid. I'll GOvid . Do you believe everything you read
I always liked the neighborhood plaza's I grew up with . Each store had a street entrance. Will CTV cover more Canadian news? Our economy matters too, no? No way Mainly online sales killed it What about Canadian malls
Victoria's Secret, Bath & Body Works closing stores in Canada, U.S. as retailers struggleThe parent company of Victoria's Secret and Bath & Body Works says hundreds of locations in Canada and the U.S. are permanently closing as retailers struggle to stay afloat during the COVID-19 pandemic. Darn - I wanted to get my mask there - With all these shareholders corps closing, it really opens the door to small business owners.. too bad giants like Walmart arent feeling the same pinch Better. See, just say it. Businesses suffering because of shutdown, not Covid.
U.S. billionaires richer by $434 billion since coronavirus pandemic began: reportNearly 39 million Americans have filed for unemployment in the same time period. God-fucking-dammit. money ALWAYS trickles up It sure hasn’t trickled down
Coronavirus: U.S. calls for immediate start to review of WHO’s handling of pandemicThe World Health Organization's executive board of 34 member states, including the United States, held a three-hour session on Friday. Relfecting how poorly trump admin has handled this pandemic... trump found something to blame. He couldn't pass his own review, what the hell. He is taking down America piece by piece, day by day and everyone talks but no one stops it. Blame GOP
Asian shares fall on US friction with China, Hong Kong fearsShares slipped in Asia on Friday as tensions flared between the U.S. and China and as more job losses compounded the economic fallout from the coronavirus pandemic. Trump's about to rule the world if we can't stop him
Canada, U.S. business group urges cross-border teamwork on post-coronavirus responseThe Canadian American Business Council has launched a new online campaign to convince states, provinces and federal officials in Canada and the U.S. to team up post-pandemic.
Macy's sees sales drop of at least 45 per cent due to pandemicMacy's is warning that it could lose more than US$1 billion during its first quarter after the coronavirus pandemic paralyzed retail operations nationwide. no one cares about Macy's there are far more important things happening than Macy's overpriced junk!