Mall identity crisis as even official body abandons malls
Once upon a time, life was so simple. You would buy stuff in stores and those stores were with other stores in a place called a mall, where you would go shopping.
But such is the existential crisis facing shopping center owners that even its own global trade association – the International Council of Shopping Centers – has announced a rebranding that does not include shopping or mall in its name, as part of its rebranding. ‘a radical update of its image.
Determined to keep its acronym, however, the International Council of Shopping Centers announced on Monday that it would now identify itself as Innovating Commerce Serving Communities. Or ICSC, for short. No, me neither.
While the 65-year-old business group has chosen to keep the acronym to respect its history, the changed words reflect the change in the way ICSC members – which include most of the major owners of malls and centers. American salespeople – operate in a world radically changed by e-commerce, changing consumer priorities, the rise of multiple trends such as the environment, upcycling, rental and the leisure economy, not to mention the small case of a global pandemic.
“The terminology ‘shopping malls’ or ‘commercial real estate’ is still clearly an important part of our membership,” said Tom McGee, ICSC President and CEO, explaining the change. “But they kind of describe the historical nature of our members, demographically… the type of property it was. As opposed to the impact the industry has on communities.
McGee said that ICSC’s membership, which now numbers around 50,000, is expanding to include a host of other businesses and more specifically the ICSC is hoping “Innovating Commerce Serving Communities” will do the trick. promoting the retail sector as a community builder, career developer, job creator and economic driver. This goes against the story of an industry that has more often been blamed for out-of-town malls emptying shops from main streets.
Those days may be largely over with online shopping more likely to be cited as the reason for store closings, but it is clearly a legacy the body wishes to leave behind.
US shopping malls face an uncertain future
The news comes at a time when retail owners are facing multiple headwinds, with rents and valuations plummeting in some places. According to a study by real estate firm Newmark and Moody’s Analytics REIS, the US shopping center vacancy rate rose to 11.4% in the first quarter of 2021, the highest in a decade.
Even the biggest real estate players had to make tough calls. Earlier this year, Brookfield Property Partners entered into a so-called “friendly foreclosure” on three of its troubled malls: Florence Mall in Kentucky, Bayshore Mall in Eureka, Calif. And Pierre Bossier Mall in Bossier City, Louisiana, with a total of $ 174.6 million in loans, according to figures from KBRA Credit Profile (KCP). Negotiations on seven other malls, with cumulative senior debt of $ 797.8 million, mean Brookfield could potentially seize nearly $ 1 billion in mall debt.
Simon Property Group implemented a similar plan according to KCP, blocking the Mall at Tuttle Crossing in Dublin, Ohio, and the Southridge Mall in Greendale, Wisconsin; while he ended capital support at Montgomery Mall, Philadelphia, and conceded his title to Crystal Mall, Connecticut. Recently Town Center in Cobb Mall, in suburban Atlanta, foreclosed on Deutsche Bank.
Shopping center groups pile up struggling retailers
Radical times require radical action. The malls Brookfield has seized have all lost at least one department store presenter or potential distressed home presenters. So when Simon Property and Brookfield jointly purchased the JC Penney Chapter 11 department store chain late last year, the rationale was not just to address anchor point closures, but to prevent the outlets of other retailers with colocation agreements.
Simon even formed SPARC Group as a joint venture with Authentic Brands Group to acquire retail brands. The two companies now have a portfolio that includes Aeropostale, Brooks Brothers, Eddie Bauer, Forever 21, Lucky Brand and Nautica.
Meanwhile, Paris-based Unibail-Rodamco-Westfield (URW) is preparing to leave the US entirely and will likely start selling its 28 US Westfield malls in 2022 following an investor insurgency in Europe. , with rebel shareholders calling the United States a vanity project.
On a conference call with analysts, new CEO Jean-Marie Tritant said, “I think the US market has to go through this cleanup process, all these B and C malls that have to close. And I think a lot of retailers have already started to pull out of those assets. “
That’s right, the assets. Don’t call them malls.