Foreclosure at the Mall
The recession's latest victim might just be that shopping center down the road.
Dec. 30, 2008— -- Forget those 50-percent-off signs. This winter you are likely to see a new sign at your local mall: "Going Out of Business." And that means big trouble for mall owners already struggling to survive.
The nation's shopping center owners are facing a recessionary double whammy: consumers who are spending less and real estate investors who are holding back money used to finance their operations.
And some analysts say that, in the next two months, those forces will collide, sending some mall owners into bankruptcy. Don't expect your local mall to necessarily close its doors -- although some of the 3,500 across the country might -- but it could very likely be owned by somebody else by the spring.
"They have significant problems by and large," said George Whalin, president and CEO of Retail Management Consultants.
In just six to eight weeks, Whalin said, "there are going to be a significant number of retailers that will go bankrupt. There's no doubt about that. ... We've just never seen anything as bad as this."
Michael P. Niemira, chief economist at the International Council of Shopping Centers, said the industry has "really been battered by every part" of this recession.
First, housing stores saw problems. Then apparel. Now every store, including the once-immune luxury retailer.
"Clearly, there are lots of problems in the retail industry and they range from the weakness in consumer demand to the debt issues that some companies are facing," Niemira said.
Back in August, Niemira predicted that sales would grow as much as 1.7 percent this holiday season. Now, he estimates a decline of 1.5 percent to 2 percent. Sales during the final week of shopping were down 1.8 percent from last year. That makes this year "the weakest holiday season since at least 1970," Niemira said in a statement this morning.
He said stores are doing everything from slashing prices to laying off workers to try to stay afloat. Retailers, he said, account for 9 percent of the nation's jobs but represent 25 percent of the recent employment declines.
