• The country's largest mall operator Simon Property Group  closed all 200 properties
  • Foot traffic in stores plunged by 30.7% year-over-year for the week ended Mar. 13
  • The national retail vacancy rate was 10.2% in the fourth quarter of 2019



Shopping malls have been closing down all across the U.S. in response to the swirling coronavirus pandemic, raising questions about their immediate future.

Last week, the country's largest shopping mall operator Simon Property Group (SPG) closed all of its 200 properties.

"The health and safety of our shoppers, retailers and employees is of paramount importance and we are taking this step to help reduce the spread of COVID-19 in our communities," CEO David Simon said in the statement.

Also, last week, the largest mall in the U.S., Mall of America of Bloomington, Minn., closed. The mall not only employs 10,000 people, but attracts 40 million visitors a year.

A number of highly populated states, including New York, Pennsylvania, New Jersey and Maryland have ordered the closure of all their shopping malls.

Even before the arrival of the virus, U.S. shopping malls were already struggling to survive as more consumers opted to buy products online. Things may now get even worse.

"With multiple cities beginning to close all nonessential stores, a severe traffic decline is imminent. And, with full lockdowns looming, shopping malls should prepare for a full traffic stop," wrote Jocelyn Bauer of, a firm that provides location analytics and foot traffic data.

The health of a shopping mall depends, of course, on the success of retail stores that occupy these spaces – and many retailers are in trouble.

Foot traffic in stores plunged by 30.7% year-over-year for the week ended Mar. 13 – and that was just before a wave of store closures across the U.S. Some malls saw traffic plunge by as much as 40% or more.

“I think [this situation] will continue for a while, and all retail stores will be at risk, including malls. The ones that are on the bubble will suffer the most,” said Farla Efros, president of HRC Retail Advisory, a retail strategic advisory firm.

The national retail vacancy rate was 10.2% in the fourth quarter of 2019, according to Reis Inc., but that figure is surely to rise this year.

A survey by Coresight conducted earlier this month revealed that 72% of respondents will avoid malls if the epidemic worsens, with about 64% avoiding all stores entirely.

Jessica Ramirez, retail research analyst at Jane Hali & Associates, said the crisis will hurt retailers who are already struggling the worst.

“In the U.S. in particular, we are overstored. We don’t need as many stores as we have. Even now, after all the closures we’ve seen over the past years, we are still overstored. So, if you see store closures, it’s not necessarily a bad thing,” Ramirez said.

Efros of HRC thinks online retailers will become even stronger.

“I think as the outcome of all this, we will see more bankruptcies, more closures, and online now will continue to grow and [take] a greater share of the pie,” she said.

The International Council of Shopping Centers, a global trade association of shopping centers and retail real estate, expects widespread closures.

“Without ensuring the stability of our tenant base, the repayment of up to $1 trillion in secured and unsecured debt underlying the shopping center industry will be at risk,” wrote ICSC CEO Tom McGee. “This will jeopardize the entire industry and cause long-term damage to financial markets, rampant unemployment and irreparable harm to communities across our country.”

This is a disaster for retail said Neil Saunders, an analyst with Global­Data Retail. “Some retailers will be able to weather it, but they won’t have very good numbers. For others, their survival is very much on the line,” he added.

Efros noted that during the shutdown most retail tenants will ask for reduced rents, no rent or deferred rental payments.

“I have a feeling -- I’m not completely sure -- but I think there’d be some sort of agreements to work [together], especially if the malls themselves are closing. If you’re closing your stores and you’re not making any money, it’s hard to ask [those retailers] for a follow-up,” Ramirez said.

Ramirez also noted that large retailers with “robust omnichannel capabilities” like Dick’s Sporting Goods, Target (TGT) and Walmart (WMT) will be in the best position to cope with the coronavirus pandemic. But struggling retailers may go under.

“If you look at Macy’s (M), I don’t think their inventory’s in line,” she said. “Stores like JCPenney (JCP) probably aren’t either. If your inventory is messed up and if you’ve been locked down for two weeks, I don’t know if that’s going to be anything positive. The department stores, for a while, have not been listening to their consumer and have kind of been digging their own hole.”