The Day the Malls Stood Still
Retail downturn hits the megaplexes that house them.
Paltry sales at retailers have finally taken a toll on the buildings that house them, and many economists are predicting serious trouble ahead for mall owners.
According to an article on CNBC.com, "the dismal holiday shopping season… could take down some US malls struggling with vacancies, softening rents and their own large debt loads."
Some mall staples, like KB Toys and Circuit City, have already filed for bankruptcy. The International Council of Shopping Centers estimates national chains closed approximately 6,100 stores in 2008, and fourth-quarter mall vacancy rates could top 7%, the highest since regional mall performance was first measured.
Moreover, anchor stores like Sears (SHLD) or Macy's (M), critical to a mall's well-being, are suffering badly.
Malls, originally part of the post-World War II suburban sprawl, have become a sort of flagship for American consumerism. Convenience. Bounty. Air-conditioning. When Americans packed up and left the cities in droves, leaving downtown districts dilapidated and impoverished, all that wealth went straight to the mall.
Now where will we go?
An abandoned mall is an eerie thing indeed. At Deadmalls.com, you can see this for yourself: Unsettling photographs of empty food courts, deserted department stores, and escalators arrested in mid-motion.
Nothing drives home the reality of our economic situation like a darkened storefront, empty parking lot, or vacant restaurant. These are the tangible signs of a landscape in crisis - and the panic they inspire helps keep what money we have left in our wallets.
Luxury malls, anchored perhaps by a glittering Saks (SKS) or Nordstrom (JWN), are particularly at risk for a major slowdown. Terrified consumers are unlikely to drop that extra $400 on cashmere.
Malls, however, have always been more than the sum of their parts: They're also the place where we spent a thousand teenage nights, the place where we tossed pennies into fountains and played air hockey at arcades. As the 1995 film classic Mall Rats makes clear, malls aren't just a place to shop - they're also a place to steal, fight, fall in love, and fornicate in elevators.
Malls have always been about possibilities. Where else can one hop effortlessly from a Piercing Pagoda to a Sunglass Hut?
As usual, no one captures the wonder of malls better than Homer Simpson.
"I want to shake off the dust of this one-horse town. I want to explore the world. I want to watch TV in a different time zone. I want to visit strange, exotic malls... I want to live, Marge! Won't you let me live?"
Mall owners are probably asking all of us the same question.
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