America's Desperate Mall Owners Turn To Grocers, Doctors & High Schools To Fill Empty Space

Tyler Durden's picture

Once a shining beacon of American capitalism, malls around the U.S. are failing at an alarming rate due to a combination of shifting consumption patterns, years of underinvestment by mall owners and a spate of retailer bankruptcies over the past 12 months that have left large swaths of once prime real estate empty (see "Number Of Distressed US Retailers Highest Since The Great Recession"). 

Now, as the vacant square footage grows larger, mall owners are being increasingly forced to turn to non-conventional tenants to fill empty space.  Per the Wall Street Journal, the latest target of mall owners is yet another struggling industry, grocers, with everyone from Whole Foods to Kroger looking to snap up square footage at discount prices.

Natick Mall in Natick, Mass., is leasing 194,000 square feet of space vacated by J.C. Penney Co. to upscale grocer Wegmans Food Markets Inc., which is planning to open a store in 2018.


College Mall in Bloomington, Ind., plans to bring in 365 by Whole Foods Market in the fall.


Grocery giant Kroger Co., meanwhile, has purchased a former Macy’s Inc. location at Kingsdale Shopping Center in Upper Arlington, Ohio, and plans to build a new store in its place.



Of course, mall owners tout the defensive nature of grocers who are, at least for now, more immune to online retailers and the economic cycle than traditional retailers.  And while there may be some truth in those statements, they certainly overlook some major challenges associated with adding grocers to mall spaces including the fact that malls are typically intended to attract customers from a much larger radius whereas traditional grocery shoppers generally prefer more local options. 

Moreover, adding grocery stores as an anchor tenant is unlikely to help the other retailers in the mall.  Lets face it, grocery shopping is generally not a pleasant experience but rather a weekly chore that people generally like to do as quickly as're not going to do your grocery shopping and then casually peruse the Express store while your ice cream melts in the car.

But supermarkets might not do much to lift other retailers in struggling malls, analysts said. Grocery shoppers, especially seniors, often are sensitive to the distance between their car and the store, and might not want to navigate busy malls with grocery bags in tow, or supermarkets with mall purchases in hand.


“You’re not going to buy a Louis Vuitton bag or a dress when you’re carrying your groceries,” said Jeff Edison, chief executive of Phillips Edison & Co., an owner and operator of grocery-anchored shopping centers across 34 states. His company’s neighborhood shopping centers are smaller and closer to customers, who typically live within 3 miles of a center.


“It’s a fine line how this strategy is implemented,” said Thomas Dobrowski, executive managing director of capital markets at real-estate services firm Newmark Grubb Knight Frank. “The addition of a grocery anchor is not necessarily complementary to the other stores, particularly fashion retailers.”

But grocers aren't the only new tenants taking over cheap mall space.  As Market Watch points out, everything from doctors offices to high schools are moving into what used to be prime real estate.

Beneath some positive stats, shopping malls are facing serious problems that threaten their health, including a shift to non-retail tenants and forecasted rent declines, according to Wells Fargo analysts.


Wells Fargo stresses a need to look deeper at high mall occupancy rates. Occupancy for the fourth quarter of 2016 was 93.6%, near the 93.3% for all of 2015, according to data from the National Council of Real Estate Investment Fiduciaries, cited by the International Council of Shopping Centers. However, the type of tenants many malls have is shifting to a lower-quality occupant for the overall health of the retail-focused mall, the analysts said.


"[F]or example, there are far more ‘mom-and-pop’ stores, and some malls have repurposed space for non-retail uses such as doctors offices, town libraries and even a high school,” Wells Fargo said in the report published Sunday. “Mom-and-pop” retail in a mall setting may generally be seen as a more-vulnerable long-term tenant and less of a traffic pusher without big-name brand backing.

But we're sure it will all work out just fine and wall street will go on buying those mall reits with reckless know, because dividend yields.

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Umh's picture

Indoor gun ranges. Just remember to have adequate ventilation.

Little Lucy's picture

Wow - the Guinean presidential candidate Abu Berete has invited me to Africa to help in his campaign - I'm only 19 this is the most exciting thing that's ever happened to me. Read all about it on MDB's Accredited Times. The presidential candidate is answering comments - there are a few right-wing trolls but he's handling himself well.

Stackers's picture

Lots of community colleges are remodeling empty big-box stores in Texas

847328_3527's picture

8 years of robust recovery....what do you expect!


"I fundamentally changed America!"

Shocker's picture

Yup, its been one heck of a recovery

Layoff/Closing List:

Or recovery list, depends on how you look at it.


Logan 5's picture
Logan 5 (not verified) Shocker Mar 7, 2017 1:39 PM

I say the malls get converted into PRIVATE PRISONS alongside Apple stores & DNC campaign HQ kiosks...  (with a food court in the middle of it all ~ along with a pissing Obama art sculpture of he & Chewbacca, in the choomwagon, with chrome spinning hubcaps, pissing on a tablet that says HOPE & CHANGE ~ & oh yeah ~ rap music blaring out of his ass)

Joe Davola's picture

Glad I ignored most of that claptrap "The Malling of America" we were forced to read as an undergrad.

PT's picture

I'd buy one, for the right price.  Of course such a statement is only theoretical because "the right price" would have to include the right "insulation" from on-going costs.  Hey!  Not my fault.  Times are tough!

847328_3527's picture

It's an "inconveneint truth" that Soweeto destroyed American middle class consumers.


... meanwhile, Bankers have had 16 golden years of Bush and Soweeto's bailouts and zirp.

LeftandRightareWrong's picture

But the Bankers then bought mall REITs.

Lore's picture

Mall fundamentals have been horrific for years. Every research 'analyst' and money manager who recommended this shit ought to be lined up against a wall.

Canada Pension Plan puts malls abroad in its shopping basket (2013)


LowerSlowerDelaware_LSD's picture
LowerSlowerDelaware_LSD (not verified) 847328_3527 Mar 7, 2017 4:35 PM

Amazon can use them as distribution warehouses and delivery droneports.

chiquita's picture

This is a good idea, although I hate to give Amazon (meaning Bozos) more ability to make money....

SafelyGraze's picture

after the construction, the wealth extraction.

after the wealth extraction, the demolition.

after the demolition, the rubbleClearing

after the rubbleClearing, the freedomTower

louis xiv 

Chupacabra-322's picture

You Graduate with a HS Diploma. Get on the job training / placement via an Apprenticeship in the retail sector. Genius.

phallusfigure's picture

That works until those student loans don't get repaid.

fx's picture

A loser asking another loser for help. What a story, indeed!

cheech_wizard's picture

Poor MDB... reduced to trolling as a pussy-hatted female anime character.

Standard Disclaimer: Have you no (gay) pride?


GardenWeasel's picture

Did you say "MDB's Accredited Times"?  MDB??  HAHAHA. Hey MDB, are you reduced to sneaking in now?

RagaMuffin's picture

Don't hold your breath    ;-)

Consuelo's picture



Gotta love that need-filling entrepreneur attitude...!!!  

Bravo Sir --  

Takeaction2's picture
Takeaction2 (not verified) Umh Mar 7, 2017 1:07 PM

Here in Portland, Oregon...if you get just outside of downtown...there are a shitload of big properties that are vacant and for sale (Commercial).  I am talking BIG.  Department stores...Vacant...Walgreens stores...Gone..building Vacant...The small strip malls....many Vacant spots.  The housing market is screaming through the roof and our homeless population out of control, yet millions of square feet of commercial real estate just sits.....

shovelhead's picture

Time for Crash-Pads R Us.

Dormitory housing for the drug and alcohol addicted.

"Make your Mall panhandling easy and convienient. Live where you work".

chubbar's picture

Some smart fuck will combine section 8 housing, jail, high school and KFC into a mall and make a killing (no pun intended).

American Gorbachev's picture

and make it a gun-free zone with hired security, gated "community" ???

dat mite make someone some $$$$


aardvarkk's picture

Telecommuting plus Amazon = suburban wastelands.  I got my first full-time telecommute job a few years ago, and fell into a bit of a hermit lifestyle for quite a while.  I basically got out to get groceries, plus any entertainment (movies, etc.)  Most non-grocery needs met by Amazon and other online retailers.  If you think about it, enough people start doing that and ALL brick and mortar operations are history.  Even a lot of the can have them delivered to your door.  I didn't do that because I'm kind of a hermit anyway, and I figured I should at least have SOME time out of the house.

Also, I noticed that when telecommuting, the quality and comfort of your home becomes more important.  People who know they will be doing that often get bigger homes too with a dedicated office and whatever.  So shrinking commercial space and expanding residential.  Makes sense.

Spungo's picture

I'm not sure if buying food online would be cost effective. It's definitely cost effective for things like spices and hot sauce, but I'm not too sure about ordering pounds of beans, pounds of rice, pounds of pasta. Shipping on a pair of socks can be $5, so I'm not sure what shipping on 50 pounds of food would be.

carbonmutant's picture

Considering how Californians have driven up the cost of real estate in the Portland Metro it's really surprising that so much commercial property in Beaverton is lying around vacant.

Chauncey Gardener's picture

Finally, someone else in the Portland Metro area who gets it. Lars is right, Havana on the Willamette.

Still LOTS of empty tilt-ups in the industrial parks here in Wilsonville, meanwhile try to find a two bedroon apartment here for less than $1600/month.

PT's picture

Funny that.  They should just lower the price until homeless people can afford to buy it.  Then the homeless can live there!

Blue Snowflake's picture

This is actually a decent idea.

scintillator9's picture

From watching various videos on line, it would appear that a number of malls already are impromptu firearm ranges.


stormsailor's picture

now thats funny. release the new air jordans and have a marksmanship contest at the same time.


the mall in the city i live in, outskirts of charlotte lost sears, pennys looks like it should have gone down 4 years ago but a couple of large department stores still anchor it. 


this mall made a "sweet-heart" deal with the dmv to move their operations into an area beside the food court. The reason?  because most of these commercial leases, particularly in malls have a foot-traffic clause that would allow long term tenants to walk out if a certain amount of foot-traffic is not maintained.  since the only tag office within 30 miles is this place, anybody not clever enough to not have to go there, few in this neck of the woods, are queued up by the hundreds every day. therefore keeping the two long term anchors frozen in place.

jus_lite_reading's picture

I say, fill 'em with traitorous scum and use live targets... FEMA camps!

PlayMoney's picture

My plan there is to sell bitcoin mining equipment to snowflakes.

Nobodys Home's picture

"Indoor gun ranges. Just remember to have adequate ventilation."

No investment needed. 100 yard lanes right down the main hall. Coming soon to a mall near you.

Sponsored by Alan's Snackbar

chiquita's picture

Here in Daytona, there's an indoor gun range that's also a bar/restaurant.  They advertise in one of the shopper magazines with coupons for range specials, meal deals, and drink specials.  You can even rent machine guns there.  Haven't been over there, but sounds like a real fun place (I seem to remember seeing something about no shooting after drinking.)   Maybe they could franchise this in the empty malls.

itburnswhenitheta's picture

They already said that - "schools," see?

sgt_doom's picture

Businesses today in Amerika are so bereft of any creative insight into how to do business --- probably always like that, though?!


1)  Contact ecstasy dealers and suggest they use the malls for their raves.

2)  More local movie studios (especially since more people view Youtube than the boob tube) could be set up at malls.

3)  A National Playground Act could use the space at the malls for physical --- and mental --- improvement.

The list is endless . . .

Ljoot's picture

Rental storage units will be prime crib someday.

balz's picture

Tear down that mall.

lasvegaspersona's picture

You didn't build that mall!!!

malinvestment did.....

JuliaS's picture

Together we can rule themall!

CClarity's picture

I've been suggesting for years that they convert to adult day care, memory care, spaces, ESL classrooms, skills training (programming etc).   

Hal n back's picture

I want my "condo" to be between the food court and Hobby and coin shops.

garcam123's picture

I want to stay close to the Robo-Blow-on the GO! Kiosk where you can fall in lust with a robot who looks like what you like and has a 300 psi auto blowjob built into it.....guaranteed toe curler EVERY TIME!    AHHH, the future........where's that damn astroid, anyway!

SweetDougisaTwat's picture

You got dibs.  Early bird gets the worm.  Good for you.

Consuelo's picture



"Once a shining beacon of American capitalism"

I can still remember the old man's consternation over the budding term of the day: 'Consumer'.   Obviously, as opposed to: 'Producer'...

Mindless shopping for shit no one needs is not my idea of the 'beacon of Capitalism'. 


BigFatUglyBubble's picture

Haha, come'on, you don't like the sharper image?  You can buy a chair that massages your balls, makes coffee, and checks your twitter feed.