Thursday, July 16th, 2020 July16th2020

Sell for More Trivia: Will 1 out of 3 malls disappear by next year?

Published on July 16th, 2020

Sell for More Trivia is a weekly blog series that playfully presents a trivia question about commercial real estate.


A third of America’s malls are going to shut permanently by 2021, according to one former department store executive, as their demise is accelerated due to the coronavirus pandemic.

“The mall has been losing ground for a long time, now it’s losing ground faster,” said Jan Kniffen, a former exec at The May Department Stores, which was eventually folded into Macy’s.

“I expect we are going to see at least 20% of the [inside of the] mall go. I expect to see a third of the malls go a lot sooner than we thought,” he said on CNBC’s Squawk Box.

Initially, he was expecting roughly 33% of America’s malls to go dark by 2030. Now, Kniffen thinks that will happen by next year.

There are still about 1,000 malls operating in the U.S. today.  A large majority of those malls are classified as so-called “B”, “C” and “D” rated malls, meaning they bring in fewer sales per square foot than an “A” mall.

An A mall could bring in as much as $1,000 in sales per square foot, for example, while a C mall does about $320.

There are roughly 380 C and D rated malls out of the 1,000.  And those are considered the most at risk of going dark, permanently, as they don’t generate enough sales to maintain the property and also have greater vacancy rates.  Many believe that C and D rated malls are not viable retail centers long term.

Macy’s Chief Executive Jeff Gennette recently spoke to this reality.  “When you look at the bulk of those stores, they’re in A malls,” Gennette said, referring to the locations that Macy’s plans to keep open longer term, as it shuts 125 stores over the next three years. “51% of our stores and 65% of our sales are in A malls.  And they’re the best malls in the country. They will stay, definitely, in my perspective, and will stand the test of time.”

“We’ve got highly motivated REIT developers that I think are best in class, and they’re looking at remixing the tenant mix of these malls,” Gennette added, referring to A mall owners such as Simon and Brookfield.

Macy’s is here to stay, now that it has secured $4.5 billion in new financing to weather the Covid-19 crisis.  But the future for many other retailers is much less certain. Department store operator J.C. Penney is still trying to emerge from bankruptcy as a smaller business. Stage Stores could be forced to liquidate if it does not find a buyer. Signet, the owner of jewelry brands including Kay, Zales and Jared, said that it will close as many as 400 locations, as its sales plummeted due to the pandemic. Even Macy’s said it could “accelerate” its store closure plans, but it is still working through that with its landlords.

A record 25,000 store closures are expected to be announced by retailers this year, according to Coresight Research. And about 55% to 60% of those closures will be in America’s malls.


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About Beau Beach, MBA CCIM

Beau is a tenacious Commercial Real Estate Broker, author and adoring father of four. His clients appreciate his no-nonsense demeanor and his legendary work ethic.

Beau leads Beachwood which is a commercial real estate broker for sellers in the Nashville, Milwaukee and South Florida markets.

He’s the author of the books The 3 Reasons: Why Most Commercial Properties Don’t Sell and True Wealth: What Every Seller Should Know About 1031 Exchanges.

Beau can be reached at 800-721-3287, click to schedule a call or