I have written a couple of times before about the state of large shopping malls around the world, but a story from CNBC today shows that the economic upheavals are also playing havoc with their smaller and generally uglier cousins, the strip mall.
Even more so than mega-malls, strip malls—with a dozen or so stores stretched along busy U.S. highways—define the American retail landscape, and their owners are suffering … In the past several weeks, the eight-store Paramus Towne Square mall in Paramus, New Jersey, has seen the parent companies of two of its anchor stores, home goods seller Linens ‘n Things and electronics center Circuit City, file for bankruptcy. And, earlier this year, the mall had to find new tenants for a Borders bookstore, which closed when its parent company cut costs. “If you are an owner of a mall or a small strip center, it’s been a very difficult year and likely to get worse next year,” said Mark Claster, a partner at the turnaround and financial advisor, Carl Marks Advisory Group …
U.S. retail vacancy rates rose to 6.6 percent in the third quarter from 6.1 percent a year earlier, according to CoStar Group, a provider of commercial real estate information and data. Shopping centers, a category that includes strip malls, are doing much worse than that, reporting vacancy rates of 9.4 percent … The trend is expected to accelerate as the financial crisis has tightened credit, say retail analysts and restructuring experts.
Block after block of derelict strip malls is the death of any town, especially those on highways that depend on passing trade. Blight begets blight and pretty soon there aren’t enough tax dollars to make the improvements needed. The collapse of neighbourhoods tends to happen quickly, and the dereliction of large suburban/highway areas could well be one of the earliest, and most lasting, of the devastations driven by the credit crunch.