Mall Owners Mining Opportunities From Anchor Closings

DALLAS-Seize the opportunity, say two of the nation’s leading mall owners, who are prospecting for gold in the mid-price retailers’ storewide clearance of under-achievers. “It’s a short-term distraction and a long-term opportunity,” Bob Michaels, president of Chicago-based General Growth Properties Inc., tels GlobeSt.com. There’s actually very little hand-wringing going on at General Growth, which has three malls losing JC Penney anchors and eight Montgomery Ward closings. Truth be known, says Michaels, “Ward probably overstayed their welcome.” Overall, the estimated 700,000 sf is just a drop in the bucket for General Growth’s 120 million sf of retail space nationwide.

The bottom line is that malls now have an opportunity to rethink the space. The Simon Property Group Inc., based in Indianapolis, has been hit the hardest by Plano, TX-based JC Penney’s 55-store shutdown. Five Simon malls are losing JC Penney anchors, freeing up 724,000 sf of prime retail space. According to insider information, the annual effect tallies less than a penny a share or about $1.1 million. But there’s also 33 Montgomery Ward anchors going away in the REIT’s 185-million sf portfolio. So thinking, they are over at Simon’s headquarters and the prospect is looking pretty good for baiting big-box retailers to share the roof with specialty stores. That’s what has happened at Washington Square Mall in Indianapolis where the Ward vacancy has been re-tenanted by Target. “We would not be surprised to see another couple of big-box tenants replace JC Penney at this mall,” says the inside report. And, conclude the soothsayers, Washington Square Mall isn’t a major player so it may be the best thing that could have happened in the long term.

Every possibility is being given thought these days: power centers, big-box tenants, specialty kiosk space and even courting traditional out-parcel tenants to the mall’s hallowed halls. There’s a fundamental shift in what malls have become at the behest of the shopping public, says Michaels.