1031 Exchange Series: The Retail Apocalypse

An Abundance of Malls

 

In 2021, it is estimated that 1-in-3 malls and half of department stores across the nation will close permanently. 75% of all mall owners are considering repositioning mall spaces in the future. Malls typically generate a good chunk of local tax revenue but increasing vacancy is a problem that only keeps growing. Larger anchor tenants like JCPenny and Sears aren’t attracting the crowds they used to. Families don’t look to spend their days visiting the local mall anymore.

 

In the past, citizens believed having a mall is what turned their area into a city. Malls were…

 

• An indicator of economic success

• An engaging place to spend time and money

• A controlled, safe environment where people may interact with others

• A bastion of suburban life, providing an experience similar to what previous generations experienced in big cities

• Shaping the way Americans see themselves and how they’re viewed by others

 

An increase in globalization, e-commerce, and health considerations have shifted consumer behaviors. Shopping online offers a wider selection of goods and a convenient experience. Less overhead allows online retailers to offer products at reduced prices. Many malls that struggled to operate eventually became revitalized and turned into fulfillment centers by Amazon, the entity that brought about their decline.

 

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