Mall Vacancies At Six-Year High As Local Economies Stumble On Retail Slump

Retail vacancies at regional shopping malls have reached a six-year high - jumping to 8.4% in Q1 2018, the highest level since Q4 2012, according to real-estate data firm Reis Inc. which studies 77 metropolitan areas.

Furthermore, local neighborhood and community shopping centers in 41 of the 77 areas tracked by Reis experienced an increase in vacancies during the 12 months ending March 31.

The numbers show that bricks-and-mortar malls and shopping centers continue to be hurt by shifting consumer spending patterns, particularly the increasing use of online retail. Numerous department stores and other retailers that traditionally have been mainstays of shopping areas have been contracting or have failed.

Reis reported that retailers occupied 453,000 more square feet of shopping center space at the end of the first quarter than the fourth quarter of 2017, but that amount of “absorption” was the lowest for any quarter in more than five years. The completion of 712,000 square feet of new shopping center space also was “much lower” than average, Reis said. -Wall St. Journal

“The first quarter tends to see the lowest activity,” the Reis report said. “However, this was an unusually slow quarter for retail leasing and construction.”

The death of brick-and-mortar and its impact on jobs across the country comes as no surprise to anyone paying attention to the evolution of e-commerce and the convenience of various payment methods.

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Last September, Toys “R” Us Inc., the largest US "brick and mortar" toys retailer, filed for bankruptcy. In March, it moved to liquidate its inventory, close stores nationwide, and finally shut down Toys R Us and Babies R Us websites - leaving shoppers with a thank-you note.

And while everyone likes to point their finger at Amazon - the retail apocalypse can't be tied to just one catalyst. Massive excess capacity, perpetually over-leveraged capital structures and a constant lack of capital investment have doubtless contributed to the decline.

In 2017, mall-based apparel retailers and department stores alone account for nearly half of the 6,955 store closures

Meanwhile, given the number of real estate delinquencies sprinkled around the country, the store closure counts above will undoubtedly only continue to grow.

Of course, the wave of retail failures is a direct hit to an industry that is the largest employer of young Americans and those at the low end of the income spectrum with retail employment drastically lagging overall private job growth.

President Trump renewed his long-standing attack on Amazon last week - tweeting "They pay little or no taxes to state & local governments, use our Postal System as their Delivery Boy (causing tremendous loss to the U.S.), and are putting many thousands of retailers out of business!"

That said, Amazon has previously pointed out that it collects tax on its own inventory in all 45 states that require such a tax.

As we reported earlier, Trump is "obsessed with Amazon," a source told Axios. "Obsessed", and added that Trump has allegedly talked about changing Amazon’s tax treatment because he’s worried about mom-and-pop retailers being put out of business. Another Axios source said that POTUS has "wondered aloud if there may be any way to go after Amazon with antitrust or competition law."

Trump’s deep-seated antipathy toward Amazon surfaces when discussing tax policy and antitrust cases. The president would love to clip CEO Jeff Bezos’ wings. But he doesn’t have a plan to make that happen. -Axios

According to Vanity Fair, Trump wants the Post Office to increase Amazon's shipping costs.

When Trump previously discussed the idea inside the White Hose, Gary Cohn had explained that Amazon is a benefit to the Postal Service, which has seen mail volume plummet in the age of e-mail. “Trump doesn’t have Gary Cohn breathing down his neck saying you can’t do the Post Office shit,” a Republican close to the White House said. “He really wants the Post Office deal renegotiated. He thinks Amazon’s getting a huge fucking deal on shipping.” -Vanity Fair

Of the areas tracked by Reis which have been hit the hardest by the retail apocalypse, Indianapolis and Tacoma, WA had the highest year-over-year vacancy increases.

Syracuse and Cleveland had the largest decrease in retail mall vacancies, falling one percentage point to 12% at the end of the first quarter. Cleveland came in second, dropping 0.7 percentage point to 14.6%: both of these suggest a risign tide of service unemployment.

Jobs in the retail sector are the most prolific in America, employing 4.3 million workers as salespeople and 3.3 million workers as cashiers. (source) The current store closures mean the end of employment for tens of thousands of workers.

All in all, the collapse of the retail industry could, at some point, put the livelihoods of more than 7 million people in jeopardy. Perhaps "doomsaying" economists (such as, gasp, Peter Schiff) are correct when they warn that another Great Depression is upon us, but with the fake stock markets near all time highs, everyone is too distracted to notice...

Comments

FireBrander DillyDilly Wed, 04/04/2018 - 09:20 Permalink

Locally, our mall parking lots are full of cars 24x7..."inventory" that won't fit on dealer lots..I'm not kidding...there's an abandoned grocery store nearby with a huge lot that is full of brand new Hyundai's; they've been sitting there all winter...shitload of 2017's in need of a big clearance sale...I checked the dealers website and they're not even listed for sale...crazy.

In reply to by DillyDilly

GUS100CORRINA MusicIsYou Wed, 04/04/2018 - 06:38 Permalink

Mall Vacancies At Six-Year High As Local Economies Stumble On Retail Slump

My response: And we call this the AMAZON SCORCHED EARTH policy. Who needs fo build new schools when we have all of these EMPTY MALLS that can be turned into schools?

AMAZON has been getting subsidized by the AMERICAN TAX PAYER for the last DECADE. BEZOS is getting rich of the PUBLIC LARGESSE with the HELP of WAPO lobbying firm. 

As a SIDE NOTE, CHINA trade deficits for the last 10 years with the USA top 3 TRILLION DOLLARS.

MORE "OBOZO" ROTTEN FRUIT complements of the PROGRESSIVE LIBERAL and RINO CONGRESS!!!!!!

If AMERICA was not getting revenue from TRUMP business friendly ENERGY export policies, AMERICA would be in a DEPRESSION. 

In reply to by MusicIsYou

swamp GUS100CORRINA Wed, 04/04/2018 - 09:53 Permalink

Mall construction at all time high. 

Every corner is now a strip mall.

corner stores used to carry urgent essentials. 

Now there’s a frivilous strip mall everywhere filled with frivilous non necessary crap. 

How much crap can people buy?

crap saturation = peak crap. 

Besides, i buy online to save money, gas, time  and taxes. And the experience is more pleasant sitting where I choose listening to good music instead of tripping over peoples’ dog leashes and listening to awful music under awful lighting.

Stores suck 

In reply to by GUS100CORRINA

FireBrander helloimjohnnycat Wed, 04/04/2018 - 09:25 Permalink

In 2009, local mall went bust. In 2011, new owners started a major renovation. They gutted the place and half way through the renovation they went bust. Place is a complete disaster; you literally have to go outside to get from the eastern section to western section which is 80% empty because it's all torn apart; they bought a semi-load of plywood and just boarded up the storefronts of half the mall...been that way for 7 years now..don't know how the doors are still open.

In reply to by helloimjohnnycat

MusicIsYou Wed, 04/04/2018 - 04:28 Permalink

About another 15 years the U.S will look like Somalia, and local warlords will have their headquarters in rundown malls. It'll be like some movie because of course many movies are prophecies.

InnVestuhrr Wed, 04/04/2018 - 06:00 Permalink

GREAT opportunity for buying liquidated retail store inventories at VERY low prices.

I have loaded up and still buying, sold tons at good profits in remote recreational areas I go to often where there are very few retailers.

GotAFriendInBen Wed, 04/04/2018 - 06:22 Permalink

Working at a mall is not a "livelihood"

It's a sentence

 

All in all, the collapse of the retail industry could, at some point, put the livelihoods of more than 7 million people in jeopardy.

Chuck Walla GotAFriendInBen Wed, 04/04/2018 - 08:54 Permalink

I've been watching my local mall here in Puckerbush. We walk there during the cold winter. I have never seen so many vacancies in 40 years, the clothing places close regularly. Note, we are about the last place on earth where these things hit. When we see it, things are already pretty far along whatever path they are taking.

 

That employment map makes a great primer on where to expect a spike in crime.

In reply to by GotAFriendInBen

Let it Go Wed, 04/04/2018 - 06:25 Permalink

Small business is hard, going into business is risky, and many people are not up to the task. We should not underestimate the role new government regulations or Amazon's exploitation of brick and mortar stores have played in undermining their success. In fact not only has government been complicit in allowing businesses to be destroyed but in many ways they even subsidize Amazon.

It is very important that small business failures receive a lot more attention then they do. When a business fails contracts often go unfulfilled, bills are not paid, suppliers must take write-offs, and landlords after only a few months rent can get back buildings altered in negative ways. More on the cost of small business failures in the article below.

 http://Small Business Failures Merit More Attention .html

Scooby Doo Chuck Walla Wed, 04/04/2018 - 10:51 Permalink

 I logged in just comment on this. When we first started our business, we were losing money hand over fist. We got better at running the business and decided to work really hard to turn it around. Between the two of us, we started putting in 100 to 160 hours combined a week.  We started to become profitable. We are a very small business. But that doesn’t stop our government agencies. About every 3 to 6 months, one of the government agencies be it federal, state, or local, sends us a demand to prove we paid our taxes.  And we prove it every time because we’re not trying to cheat the system, we’re trying to earn a living. And don’t get me started about the unemployment compensation board.  Last year, an employee texted me that he quit. I still have the text message. He had found another job. In December he went down to the unemployment agency, said that we had a lack of work and he deserved compensation. So they immediately began paying him out of our unemployment compensation account. I had an attorney friend of mine write the dispute, and long story short, I got all the money back. 

I dread going to get the mail.  we get some government agency determined to find us doing something wrong.  They are like locusts. They just never ever ever stop. The big companies have armies of accountants and lawyers that can handle all the stuff.  Mom-and-pop shops get overwhelmed and burnt out. 

 

 

In reply to by Chuck Walla

Muppet Chuck Walla Wed, 04/04/2018 - 13:07 Permalink

For a small biz, a problem is the number of hands in your pockets, particularly companies aiming to "get a cut" out of every business (like Government). 

Companies like: Yelp, TripAdvisor, Google, BMI, ASCAP, AngliesList, HomeAdvisor, GrubHub, UberEats, DiningDash, etc.  There's also the Merchant (credit card) processors like Heartland, Vantiv, etc who impose 2.5% on any credit card payment (although I foresee Government will soon seize and control this business and its revenue).   

For restaurants, the worst is OpenTable, which charges $2.50 for each person in "reservations they help book for you".  This intrusive service can add costs over $1000 per month.

In reply to by Chuck Walla

Big Brother Wed, 04/04/2018 - 07:11 Permalink

Too bad the over-arching mall architecture design cannot be repurposed.  At least with the 120-year old vacant warehouses, one could convert them into lofts and condos.  These dinosaurs will have to be leveled.  The mall concept clearly has a short life-span.

Looking forward to the day when all the Walmarts, K-Marts, Targets, Kohls, Menards, Fleet Farms, Home Depots, Lowes, etc. follow suit. 

Jasher Wed, 04/04/2018 - 07:11 Permalink

In the day when the keepers of the house shall tremble, and the strong men shall bow themselves, and the grinders cease because they are few, and those that look out of the windows be darkened,

And the doors shall be shut in the streets, when the sound of the grinding is low, and he shall rise up at the voice of the bird, and all the daughters of musick shall be brought low;

weliveinamatrix Wed, 04/04/2018 - 07:29 Permalink

Malls....a place where kids hang out to get away from their parents...a place where people go to find a romantic or sexual hook-up...a place where you take the kids for an hour and call it an "outing" lol...I go to the mall in hopes of a sexual encounter in the changing room :-)

GeezerGeek weliveinamatrix Wed, 04/04/2018 - 14:46 Permalink

It once was common in S. Fla. to see geezers walking around the malls, particularly in summer. Too hot to walk outside, they found air conditioned malls a perfect place to get low impact exercise. I doubt they ever bought much.

Now one myself, I wouldn't consider such things myself. Times have changed, and some of the malls here require open carry to feel safe.

In reply to by weliveinamatrix

Last of the Mi… Wed, 04/04/2018 - 07:38 Permalink

We went to the mall last weekend for a walk through (During daylight hours). It was an experience in massive displays of shit I have no interest in purchasing and rubbing shoulders with people I have no interest in being around.

There is like some kind of half-speed jungle boogie slow walk from store to store that is just mind numbing in it's display as the morbidly obese unemployed shuffle from one store to the next.

I was telling wife, if you want something go in and out through one of the anchors, but doing the walk through the mall is an exercise in frustration in looking for anything in any way useful to purchase or any social interaction that doesn't begin and end with the entitlement crowd.

Most of them purchase there because they can't have an Amazon box on their front door step for a few hours without it disappearing.

And not to mention, the food courts absolutely suck now.

Bai Suzhen Wed, 04/04/2018 - 08:26 Permalink

Malls=roving bands of loud negroes and Mexicans.

Malls=stores selling the cheapest imported junk for the highest prices.

Malls=clerks that probably don't speak a language you speak.

Malls=the opportunity to get your purse stolen or carjacked in the parking lot.

Malls=homo sex propositions in the restrooms.

Now, tell me why malls are failing?

flexforthecamera Wed, 04/04/2018 - 09:44 Permalink

Not at all malls were created equally--- the real high quality malls with tons of experiential retail continue to do well... these generally have higher quality anchors, an apple store, and some higher end restaurants....

 

However, there may only be one (maybe two malls) per MSA that are high quality..... the rest are mediocre to shitty, dying a slow death of declining sales and rolling leases. 

 

Whoever figures out what to do with these white elephants can make some moola.... likely will fall into bezos lap as major distribution centers or musk for tesla showrooms....

silverer Wed, 04/04/2018 - 10:04 Permalink

Screw the malls. I'm not against the retail stores per se, but the model sucks. The banks are what make your stuff so expensive in malls. The rents are too damned high. Consumers aren't buying goods so much as paying off highly leveraged loans for the property owners.

Nunyadambizness silverer Wed, 04/04/2018 - 10:44 Permalink

Exactly.  Commercial investor has the mall built, then charges premium rent for years.  Used to be a good business model, but in the day of "Buyshitonline.com" with "free shipping", I can save money and time, and avoid all of the bullshit still associated with a mall. 

The old-time indoor shopping mall is dead.  I've seen some outdoor malls that seem to work pretty well, but nobody seems to want to "go to the mall and go shopping" anymore.  

In reply to by silverer

Scooby Doo Nunyadambizness Wed, 04/04/2018 - 11:01 Permalink

I don't even grumble about the shipping charge anymore.  Driving to the store, looking to see if the store has the item in stock, waiting in line for the ever-popular only one checkout open for the whole store, & driving back home.  Just avoiding the distracted drivers all texting & not paying attention to their driving is worth paying for shipping.  

In reply to by Nunyadambizness

fedupwhiteguy Thu, 04/05/2018 - 06:23 Permalink

o/t

50% of women have a man already picked out as plan b if their current relationship fails. (http://www.dailymail.co.uk/femail/article-2769593/HALF-women-fall-partn…)
60% of women admit to having an affair. (http://magazine.foxnews.com/love/cheating-statistics-do-men-cheat-more-…)
69% of wives initiate divorce. (http://www.huffingtonpost.com/entry/women-more-likely-than-men-to-initi…)
90% of wives, wherein the couple are college-educated, initiates divorce. (http://www.yourtango.com/experts/cindy-holbrook/top-10-reasons-why-wome…)
10% of children are false paternity. (http://disinfo.com/2011/02/one-out-of-ten-people-werent-fathered-by-the…)
95% of genetic counselors lie about paternity. (http://thelibertarianrepublic.com/paternity-fraud-is-it-legal-to-lie-ab…)
41% of 1st marriages end in divorce. (https://www.mckinleyirvin.com/Family-Law-Blog/2012/October/32-Shocking-…)
60% of 2nd marriages end in divorce.
73% of 3rd marriages end in divorce.
82.2% of women granted child custody. (http://www.census.gov/prod/2011pubs/p60-240.pdf)
Child support payments can be extended beyond 18 years of age. (http://dadsdivorce.com/articles/child-support-age-of-emancipation-in-yo…)
Alimony payments continue even when women cohabitate with another man. (http://farzadlaw.com/california-divorce/will-my-wife-get-spousal-suppor…)
Palimony payments forced on men who had live-in girlfriends. (https://www.reference.com/government-politics/states-palimony-laws-ee50…)
Prenups are thrown out in favor of fairness. (http://www.dailymail.co.uk/news/article-3525528/Judges-say-ignore-pre-n…)
Divorce devastates men financially (paying for 2 households) & emotionally (loss of access to children). (https://eternalbachelor.wordpress.com/2007/07/23/back-to-basics-divorce…)
Postponing intercourse until 26+ avoids life's pitfalls (cock carousel riders are bad news all around). (https://youtu.be/um3EmS9DKsI?t=581)
Virgin brides divorce less than cock carousel riders. (http://socialpathology.blogspot.com/2010/09/virgin-bride.html)
Women start losing their Sexual Market Value at 20 y.o. (http://www.hookingupsmart.com/2013/10/31/relationshipstrategies/conclus…)
Women gain weight after marriage. (http://www.thehealthsite.com/fitness/5-reasons-why-women-gain-weight-af…)
Frequency of sex drops off after marriage. (https://pairedlife.com/physical-intimacy/Reasons-Why-Sex-Decreases-Afte…)
Woman are just crazy for a man's money. (https://au.answers.yahoo.com/question/index?qid=20130625025358AAcogQy)
Sperm donors can be forced to pay child support. (http://www.nydailynews.com/life-style/health/sperm-donor-sued-child-sup…)