Mall owners see anchor model retail sales fading away


Once upon a time, shoppers at the great American malls bounced from Sears to Bon-Ton to Borders Books and Circuit City, stopping along the way at all the smaller stores in between. Now the anchor model, which relied on big-box retailers to drive traffic, is fading.
Sears Holding Corp filed for Chapter 11 protection on October 15, saying it will close 77 of its namesake stores in the next few months. Already, 24 percent of those shopping centers have at least one vacant anchor of at least 25,000 square feet, according to CoStar Group Inc.
Even before Sears disclosed its plans, those shopping centers were struggling to attract major tenants. Between 2007 and 2012, a cumulative 130 anchor tenants moved in, while just seven moved out. Since 2016, they have lost a total of 62 anchors, and only found 25 replacements. As Sears shutters stores, landlords will have to overcome the perception that the entire property is failing or risk losing other tenants, said Burt Flickinger, managing director of Strategic Resource Group LLC, a retail-advisory firm.
“You’re going to see an epic hollowing out of the retail malls in America, especially the malls that are co-anchored by Sears” and another struggling large retailer, Flickinger said. “It’s creating an accelerating retail ice age and an economic Armageddon of unprecedented proportions in the US”
The loss of traditional anchors doesn’t have to be a disaster, said Greg Maloney, chief executive officer of JLL Retail. Mall owners say that shuttered department stores offer the chance to release space to hipper tenants that pay higher rents, a process that takes time and money under the best of circumstances.
“It could be a double whammy or it could be a double opportunity, it could go either way depending on the property,” Maloney said.
“A lot of these developers, I don’t want to say they’re excited, but it’s a finality. Now we’re going to move on.”
At this stage in the slowly unfolding retail decline, no one will say they didn’t see the problems coming. Bon-Ton Stores Inc. filed for bankruptcy protection in February. Circuit City Stores and Borders Group went out of business in an earlier wave of bankruptcies.

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