Mall Vacancies Hit Highest Level in 20 Years
As governments around the world continue to enforce mass closures due to Covid-19, the retail sector has been hard hit with mall vacancies continued to increase. Overall, according to Moody’s Analytics REIS, the average vacancy rate for the retail sector increase to 10.4%, the highest since 2013. Additionally, vacancies for malls increased to 10.1% in Q3 2020, which is the highest figure in the last 20-years. “These declines seem tepid given the state of the retail market in which retail sales have somewhat recovered from the abyss of March, but many consumers have been hesitant to shop indoors. Restaurants had better business over the summer than in the spring, but some indoor dining restrictions will hurt business as the weather gets colder,” wrote Barbara Denham, senior economist, Research and Economics at Moody’s Analytics REIS.
Malls File for Bankruptcy or Shut Their Doors as Pandemic Pain Spreads
Landlords of malls are starting to seek bankruptcy protections due to the economic crisis that resulted from Covid-19. This is in addition to many prominent retailers like JC Penny and Neiman Marcus that already filed for bankruptcy protection. “The quantity of distressed debt and distressed opportunity is at a historical high,” said Andy Weiner, president of RockStep Capital, a shopping center investment firm that owns 11 malls across the country. Even after Covid-19, retailers will have to contend with falling sales and servicing their growing debt burdens.