Mall Closing could swell to 100 by the end of ‘09

Submitted by John Rockweiler Sr. from WSJ

The long recession is helping to empty out the
promenades. Some analysts estimate that the
number of so-called “dead malls”---centers
debillitated by anemic sales and high vacancy
rates---will swell to more than 100 by the end
of this year.

The shopping mall industry’s woes are worsening.
Thinning customer traffic, and subsequent hits to
Tenants’ sales and profits, prompted Standard &
Poor’s last month (April ‘09) to lower the credit ratings
Of the department-store sector.

Any mall that’s sitting on life support is probably going
To get it’s plug pulled” as the economy stalls, says
Michael Glimcher, chairman and CEO of Glimcher
Realty Trust, which owns 23 U.S. properties. 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.
A 52% decline in square footageequals a 34% loss in revenue see below..............

1 million sq. ft. mall at $381 per foot: $419 million/sales
1 million sq. ft. mall at $250 per foot: $275 million/sales
By declining from $381 p/s/f to $250 p/s/f the loss in
Revenue is $144,000,000 or 34%. Losing 52% in square
Footage rates equals a 52% decline in revenue.
The loss places malls in peril of closing.

Ad reps and managers should encourage tenants to seek their own personality and bring shppers to their specific stores as additional sales growth will help struggling malls.