With the Hot Market, Are Malls Residential Ready?
Will the surge in demand for residential housing result in malls being converted into housing?
Mall vacancies continue to increase and retailers look for other ways to sell their goods.
According to Moody's Analytics, the vacancy rate for regional malls in the United States climbed to 11.4% for the first quarter of 2021. This is an increase of 10% from the 10.5% vacancy rate reported for the fourth quarter of 2020. According to the information published, this is the highest vacancy rate on record since the Great Recession back in 2008 to 2010.
This may not seem like a terribly high percentage, but consider the fact that there has been a contraction in the number of overall malls in the United States. According to a Coresight Research report published in August 2020, there is an estimate that 25% of America's malls will close over the next 3 to 5 years. This trend was only accelerated by the COVID-19 pandemic.
Retail Apocalypse
"The retail apocalypse is the closing of numerous brick-and-mortar retail stores, especially those of large chains worldwide, starting around 2010 and continuing onward. In 2019, retailers in the United States announced 9,302 store closings, a 59% jump from 2018, and the highest number since tracking the data began in 2012. Over 12,000 physical stores have closed due to factors including over-expansion of malls, rising rents, bankruptcies of leveraged buyouts, low quarterly profits." Wikipedia
At the heart of this trend is the drop-off in shopper traffic to many of these malls. Many of the malls no longer have that destination quality that American shoppers look for. In addition the shopping pattern has shifted considerably from in-person to online.
The pressure has been observed with the number of store-based retail businesses filing for bankruptcy protection: such stores as JCPenney, Neiman Marcus, Lord & Taylor, Brooks Brothers and J.Crew.
Rents for distribution properties and warehouses across the country have maintained their strong resilience.
But some retailers are actually planning expansions within the discount group, including Dollar General, TJ Maxx, Burlington and Five Below.
With respect to the Monmouth Mall Redevelopment by Kushner companies, there still seems to be some delay in implementing the mixed-use center for the Monmouth Mall. Even though the Eatontown planning board voted 7-1 to approve the project, it seems like it is taking longer to execute than anticipated.
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