There's no doubt that retailers are struggling to stay in business. This is creating a "tug of war" between retailers who are leasing space in shopping centers and mall owners who are also struggling to keep stores from closing and creating added vacancies.
Some mall owners are having to refinance debt coming due to stay open. Just to point out how dire circumstances are, General Growth Properties, the country's second largest mall owner warned that it may be forced to file for bankruptcy if it cannot reschedule its huge debt. On Wall Street, the prices of REIT's (real estate investment trusts) have fallen by 44% during the past year (added: as a Dow Jones index tracking 22 REITS indicates).
Now, on the other side, retailers are trying to renegotiate their leases to lower their overhead. These include such names as Office Depot (NYSE: ODP), Chico's Fas Inc. (NYSE: CHS), Pier 1 Imports Inc. (NYSE: PIR), and The Gap (NYSE: GPS). Some mall owners are helping retailers by lowering "square feet" prices in their leases, while others are saying "no."
Vacancy rates are rising and some analysts are predicting that a growing number of mall owners will default on their mortgages and thereby put additional pressure on our banking system.
Do you own a business in a shopping mall? What are your present circumstances?
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Reader Comments (Page 1 of 1)
1-09-2009 @ 5:32AM
al coholic said...
I think in the long run malls are going to have a hard time surviving. A lot of people have the attitude these days that malls=higher prices. I live in a relatively affuent area and have observed that strip malls and free standing stores seem to be doing better.
At least for now people seem to be resisting the urge to shop at these opulant settings for the simple reason that prices of goods purchased there include a hidden surcharge to pay for the "mall experience."
1-09-2009 @ 8:20AM
Greed & Corruption said...
Mall shopper traffic in the US has been declining since 1993. Mall owners, like most other businesses and politicians in the US are greedy and selfish and only care about their own salaries and care about no one else. Mall owners have taken advantage of the "mom and pop" shops for far too long. Malls will go bankrupt and die as they should. The top executives will be just fine when the malls go bankrupt, they always take care of themselves - this is how business is run in greedy, selfish America where morals and decent values do not exist in big business or on Wall Street.
1-09-2009 @ 8:28AM
S.Haas said...
I lease space in a mall with major retailers as tenants.The lease expires at the end of the month, and the landlord had previously notified me that the base prise will rise from 23.00 per sq ft to 32.00 per sq ft and cam will be up from 34% to 44%.Obviously,they could care less about the whole situation, and I decided to vacate the premises and move to a warehouse .Most tenants in this shopping mall have indicated that they would leave as soon as the leases expire.