How mall closings in America hurt the towns depending on them

The coronavirus pandemic is speeding up the demise of America’s struggling shopping malls, which could deal a devastating blow to some towns that depend on them. 

When a mall goes dark, a community loses more than just a place to shop and grab a slice of pizza at the food court’s Sbarro. In many neighborhoods, the mall is an economic engine, hiring hundreds, if not thousands, of workers and providing a significant amount of dollars to the local tax base. 

Malls and shopping centers across the country provide $400 billion in local tax revenue annually, according to the International Council of Shopping Centers, the retail real estate industry’s trade group. And there are about 1,000 malls — both privately and publicly held — still operating in the U.S. today, according to commercial real estate services firm Green Street Advisors. 

“I worry a lot as this crisis plays out,” ICSC CEO Tom McGee said. “Our industry funds everything form the fire and police to [local] infrastructure.” 

In a pre-Covid-19 universe, teenagers would often land their first jobs at the mall. Kids would hang there after school. So-called mall walkers would use the open space in the mall before stores opened to the public to break a sweat. Mom-and-pop shop owners would open their first businesses there. And department stores, a mall’s coveted anchors, once thrived during their prime. 

The acceleration of e-commerce, along with a shift toward more consumers wanting to live downtown instead of the suburbs, has led to fewer people frequenting malls over the years. And as the pandemic hit, malls were boarded up, along with the stores in them. Some, including the Northgate Mall managed by Northwood Retail in Durham, North Carolina, are now closing for good. Former department store executive Jan Kniffen has predicted a third of America’s malls will vanish by 2021. 

As retailers aren’t able to pay rent on time, landlords of America’s malls are not able to pay their own bills, making matters worse during the pandemic and speeding up this domino effect. The Tennessee-based mall owner CBL & Associates warned earlier this month that its ability to continue as a going concern is in doubt after the retailers in its properties have skipped rent payments during the Covid-19 crisis, forcing CBL to miss two of its own interest payments. 

Should CBL be forced into bankruptcy, it would mark the first filing by a commercial real estate owner during the pandemic. They keys to CBL’s 108 malls could be handed back to lenders. Some of its properties could be shut down permanently, if no new owners emerge to take over and run these assets. 

A CBL spokesperson declined to comment about a potential…