25% of U.S. malls are expected to shut within 5 years. Giving them a new life won’t be easy
What is going to happen to America’s dead malls? That’s a million-dollar question plaguing retailers and real estate developers.

With a report circulating earlier this month that the biggest U.S. mall owner Simon Property Group has been in talks with Amazon to convert some shuttered Sears and J.C. Penney department stores into fulfillment centers, many industry analysts have been pontificating on the future of malls as logistics hubs.

Key Points

  •     Coresight Research estimates 25% of America’s roughly 1,000 malls will close over the next three to five years.

  •     The coronavirus pandemic has accelerated a demise that was already underway.

  •     “Just because retail space has gone vacant or remained fallow does not mean that it is automatically a good candidate for repurposing into industrial space,” Moody’s Analytics real estate analyst Victor Calanog said.

  •     According to data pulled by Moody’s Analytics REIS, apartment development in the U.S. is expected to be down 15.6% in a post-Covid-19 world. Office development is set to drop 10%, it said, while retail falls 15.7%.

  •     Industrial development, meantime, is expected to pick up 3.6%.

RSK: I am not totally buying that Malls and Commercial will bring in more tax revenue to a municipality...especially if the are empty. You can make the argument on assessment via the income/expense theory of appraisal. If less NOI the value should be much less. Why I think a city would entertain some zoning changes to get a Mall into an income producing element, which in turn would raise taxes being paid. Plus do not forget local sales taxes as well. Plus distribution spaces are not exactly industrial in nature.

- - Volume: 8 - WEEK: 36 Date: 9/1/2020 8:38:34 AM -