Second-tier malls are at increasing risk of collapse as retail bankruptcies and store closures add up across the country.
The category of malls — known in the industry as Class B — are in a vulnerable middle ground: more secure than their Class C and D counterparts but not as safe as high-end, Class A malls, which are considered likely to make it out of the recession, Bloomberg reported.
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The acceleration of retail bankruptcies has put pressure on the more than 300 Class B malls across the country. At the Crystal Mall in Waterford, Connecticut, for example, six retail tenants have filed for bankruptcy in the past three years, while several others are in distress, and some have indicated they may close stores.
Within the Class B category, almost one-third of B-malls have two or more empty anchor sites, according to Bloomberg. The rate is better for B and B+ malls — about 11 percent.
“A lot of the B malls are going to become obsolete,” Vince Tibone of research firm Green Street Advisors told Bloomberg. “Before they were doing their best to remain competitive, but it’s going to be hard with all the store closures to come.”
Retailers that have filed for bankruptcy this year include Neiman Marcus, J. Crew and J.C. Penney. Nationally, it is estimated that some 25,000 stores could close this year, according to Coresight, obliterating last year’s record of about 9,800. [Bloomberg] — Sylvia Varnham O’Regan