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Updated over 8 years ago on . Most recent reply

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Matthew Smith
  • Papillion, NE
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26
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Malls in decline

Matthew Smith
  • Papillion, NE
Posted

Hey y'all,

I just wanted to start a discussion about the relevance of physical shopping malls.  Do you think the environment is changing?  Do you think they will still have presence in 10-15 years with the increase in online shopping?  How do you think it will change?

http://nreionline.com/retail/day-reckoning-comes-us-shopping-malls-laden-debt

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Mike H.
  • Rental Property Investor
  • Manteno, IL
2,112
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Mike H.
  • Rental Property Investor
  • Manteno, IL
Replied

It seems like some malls are like towns. A couple of tenants move out and if the mall operator just takes the first tenant that offers them money even if the tenant is cheesy, the mall itself will start to decline.  Less people perceive the mall as having quality stuff so less go. The fewer people that go, the more the good tenants move out. The more lesser known tenants move in. And the snowball is hard to reverse.

I think the other thing thats really hurt malls is that their anchor tenants are for the most part struggling retailers. Sears, JCPenney, Carson's, etc.  They are a dying breed. But they used to be the ones to bring in all the traffic because a lot more people shopped there.

Now you have the big box retailers that are stand alone or strip mall tenants that are pulling the traffic away from those malls. Walmart, Target, Kohl's, Dick's Sporting Goods, Best Buy.  None of these are located in the mall. But these are the 20lb gorillas in retail. 

So it shouldn't be too surprising to see the malls start to fade.

And even the movie theater chains have migrated out of the malls somewhat and into standalone locations.

I think the mall operator can overcome some of these things by choosing the right tenant mix. But if they miss, they can truly destroy a mall.

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