Malaise at the mall
The great American hangout may be in jeopardy
Schaumburg, Ill. ? Something’s amiss at the mall.
The parking lots at the biggest shopping centers are still filling up on weekends, the food courts bustle with hungry customers and walkways are crowded with gangly teenagers and stroller-wielding moms.
Look closely, though, and you’ll see there aren’t many bags. That’s because shoppers at some of the country’s busiest retail centers aren’t buying. Not much, anyway.
If that sounds like grim news for retailers, consider what their landlords are facing. Unless shoppers begin spending again — soon — some experts worry the great American hangout may be in jeopardy.
Already one mall in Florida has been foreclosed on, and experts predict that others will be forced to close as their tenants shutter their doors in the recession.
The weekend crowds remain steady at Woodfield Mall, a 2.3 million-square foot behemoth in the middle-class community of Schaumburg, despite thousands job cuts by hometown cell phone maker Motorola Inc. But the waves of shoppers filling the mall aren’t spending much.
“You’re just hanging,” said Belinda Turner, a 47-year-old who came to Woodfield Mall in Chicago’s suburbs with her husband, John, their 11-year-old daughter and a strict $150 budget. “You can come and you can look and you can have food. But you don’t buy. Or you buy small things.”
On a recent Saturday, mall walkers start doing laps at 7 a.m. along the two miles of corridors. Shoppers start trickling in when the 300 stores opened three hours later, and crowds filled the marbled floors in the afternoon. In the evening, the mall became a date destination and teenage paradise.
Nationwide, mall traffic has slipped about 5 percent in the past year, but not nearly as much as traffic inside stores, which is down as much as 20 percent, according to data from ShopperTrak RCT.
“Foot traffic is OK,” Morningstar real estate analyst Todd Lukasik said. “But that’s not what makes a mall profitable or worthwhile from an economic perspective. People need to take their wallets out of their pockets and actually spend money.”
Unless shoppers begin spending again, more stores could close, starting a domino effect that could ultimately cause some of the nation’s favorite hangouts to go dark.
Some mall owners are cutting rents to try to help keep their struggling clientele, while others have fallen into foreclosure. BayWalk, a mall at the center of a revitalization effort in downtown St. Petersburg, Fla., has been foreclosed upon and will go up for sale this month because of competition and slowing sales. It remains open.
None of the about 1,500 malls in the U.S. have closed yet because of the recession, the International Council of Shopping Centers said.
Typically, if a mall lost tenants in half its stores, it was unable to pay bills. Then it might shut down or redevelop into an office complex or other format. But many malls have taken on debt that requires fixed payments each month, making their threshold for survival much lower.
Already more than 7 percent of regional mall stores are vacant, according to data from Reis Inc. — the highest vacancy rate since the research firm began tracking the figure in 2000. Community and regional shopping centers have a nearly 9 percent vacancy rate. Both figures are expected to grow through 2011, as the recession marches on.
Meanwhile, there’s little cause for optimism.
Lower consumer confidence and the highest unemployment rate in 35 years have combined to put pressure on consumer spending, a figure that accounts for nearly two-thirds of the nation’s economic activity.







