Malls and Shopping Centers Turning Into Vacant Shells

Many struggling malls and shopping centers have been reduced to largely vacant shells. The severity of a receding economy is turning some malls that were once viewed as viable into potential casualties.

From WSJ: On the low-income east side of Charlotte, N.C., the 1.1-million-square-foot Eastland Mall recently lost a slew of key tenants, including a Dillard’s and, next month, a Sears. Sales per square foot at the venue fell to $210 in 2008 from $288 in 2001.

The Metcalf South Shopping Center in Overland Park, Kan., is languishing after plans to redevelop it into an open-air shopping district fizzled.
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Some analysts estimate that the number of so-called “dead malls”…will swell to more than 100 by the end of this year.

One industry rule of thumb holds that any large, enclosed mall generating sales per square foot of $250 or less — the U.S. average is $381 — is in danger of failure. By that measure, Eastland is one of 84 dead malls in a 1,032-mall database compiled by Green Street. (The database focuses heavily on malls owned by publicly traded landlords and doesn’t account for several dozen failing malls in private hands.) If retail sales continue to decline at current rates, the dead-mall roster could exceed 100 properties by the end of this year, according to Green Street. That’s up from an estimated 40 failing malls in 2006, before the recession began.

“This time around, because of the dramatic changes in consumer spending practices, we’re very likely to see more malls in the death spiral than we’ve ever seen before,” says Green Street analyst Jim Sullivan.

Images: WSJ