U.S. Malls Struggling To Stay Afloat As Retail Gloom Continues To Deepen


Millions of consumers are turning to online businesses, such as Amazon, Overstock.com, eBay, and Alibaba, for all their shopping needs. Online shopping is much more convenient and oftentimes cheaper than shopping at the local mall. For this reason, many U.S. department stores, located in shopping malls are reaping the consequences. Ten years ago, American consumers enjoyed shopping these establishments, but this is not the case today.

Prince George's County Mall Investors spent billions of dollars to develop brick and mortar emporiums in convenient locations, filled with an unlimited array products and this is what it comes down to. September brought weak core retail sales, excluding gasoline sales, leaving retail investors feeling the pain. Many retailers are forced to continue discounting their products, just to stave off lagging sales, but this cannot go on forever.

Commercial real estate loans add up to over $128 billion. One-quarter of these loans went to finance shopping mover ten years ago. According to Morningstar Credit Ratings, these loans are due to refinance between now and the end of the physical year.

All of this is accounted to online shopping and heavily discounted sales. Profit margins have shrunk dramatically, forcing retailers to close their stores. In May, Aeropostale filed bankruptcy, proving that mall operators have facing more challenges and struggling to meet their debt obligations. According to the Commerce Department, from the end of 2009 and the end of July 2016, overall sales have increased around 31%, but department stores sales have dropped 17%.

Mall owners still have a long road ahead, so it remains to be seen whether or not they will be able to overcome this difficult time.

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