Re-Inventing 'Zombie' Malls In A Boom That's Going Bust???

"The development climate of malls were driven less by demand and more by opportunity," . . . As new centers get built, anchor stores are lured away, and a cannibalization process begins ... Only so many consumers are going to malls, and they will flock to newer ones. If developers build a new mall, they are inevitably undercutting another property. So older properties have to get re-positioned every decade, or they will die."
While everyone likes to point the finger at Amazon, the growing retail apocalypse in America can't be tied to just one catalyst. 

Certainly, there is no doubt that Amazon is taking a toll on brick-and-mortar retailers but massive excess capacity, perpetually over-levered capital structures and a constant lack of capital investment have undoubtedly helped accelerate the decline. 
As Bloomberg points out today, up until this year, struggling retailers have largely been able to avoid bankruptcy by refinancing to buy more time. Alas, as evidenced by the Toys "R" Us bankruptcy, investor demand for retail debt has waned of late resulting in a whole slew of recent retail failures.
Now that boom is finally going bust. Through the third quarter of this year, 6,752 locations were scheduled to shutter in the U.S., excluding grocery stores and restaurants, according to the International Council of Shopping Centers. That's more than double the 2016 total and is close to surpassing the all-time high of 6,900 in 2008, during the depths of the financial crisis. Apparel chains have by far taken the biggest hit, with 2,500 locations closing. Department stores were hammered, too, with Macy’s Inc., Sears Holdings Corp. and J.C. Penney Co. downsizing. In all, about 550 department stores closed, equating to 43 million square feet, or about half the totalA Look At America's Retail Apocalypse In Charts

by Tyler Darden Nov 8, 2017 8:47 PM

A Look At America's Retail Apocalypse In Charts | Zero Hedge

Info-graphic to left show delinquent loans >
Notice Phoenix

Of course, the wave of retail failures is a direct hit to an industry that is the largest employer of young Americans and those at the low end of income scale

Meanwhile, investor distaste for retail debt comes just as the industry faces a massive wave of maturities over the next five years.

Making matters more difficult is the explosive amount of risky debt owed by retail coming due over the next five years. Several companies are like teen-jewelry chain Claire’s Stores Inc., a 2007 leveraged buyout owned by private-equity firm Apollo Global Management LLC, which has $2 billion in borrowings starting to mature in 2019 and still has 1,600 stores in North America.

Just $100 million of high-yield retail borrowings were set to mature this year, but that will increase to $1.9 billion in 2018, according to Fitch Ratings Inc. 

And from 2019 to 2025, it will balloon to an annual average of almost $5 billion.  

The amount of retail debt considered risky is also rising.
Over the past year, high-yield bonds outstanding gained 20 percent, to $35 billion, and the industry’s leveraged loans are up 15 percent, to $152 billion, according to Bloomberg data.
Even worse, this will hit as a record $1 trillion in high-yield debt for all industries comes due over the next five years, according to Moody’s. The surge in demand for refinancing is also likely to come just as credit markets tighten and become much less accommodating to distressed borrowers.

So, who has been hit the hardest so far? 

The rise of the 'zombie mall' apocalypse - YouTube

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https://www.youtube.com/watch?v=YVhTf_yzOhA

Apr 14, 2017 - Uploaded by Fox Business

FBN's Jeff Flock reports on the 'zombie mall' apocalypse that's affecting the retail industry across America

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Malls of the future have an opportunity to fulfill other community needs besides commerce,
June Williamson, a City College of New York architecture professor and the author of "Retrofitting Suburbia," tells Business Insider.

Here are what may become of the many failing malls of today:

Extracts from an article written by Leanne Garfield 13 May 2017
http://www.businessinsider.com
> Closed department stores will likely become other businesses that can benefit from the large square-footage, like fitness centers, churches, offices, public libraries, and even medical clinics
> Since most food courts have a lot of natural light, they could be used as gathering spaces for community groups or child daycare centers if they close down, Williamson says.
Most failing food courts, however, are redeveloping into clusters of high-priced restaurants right now, like the one at Miami's Aventura Mall, which will get rid of the cheap chains and open a revamped eatery this fall.Mall atriums are wide-open spaces that can allow for events, like concerts or fashion shows, or serve as showrooms for cars — all of which generate revenue, Williamson says.
> Many dead retail spaces will likely morph into businesses that have community-based functions, like apartments, public libraries, indoor farms, and refrigerated spaces for processing food (for local restaurants or grocery stores), Williamson says.
"You'll find DMVs, town halls, and libraries in malls increasingly, the type of place where the public government can interact with the public," Williamson says.
> Some public spaces, like libraries, don't bring in much rent, so they mainly serve as a way to attract people to the mall, she says.
"If the mall owners can't keep the place fully leased, this at least keeps people coming who could keep the other leasees from fleeing," she says.
The 'Main Street' was killed by the mall, so developers are trying to build new downtowns inside the malls.
> Malls may increasingly (and somewhat ironically) turn their surface parking lots into space that emphasizes walking over cars.
This, in some ways, would be a nod to the original intended use of a "mall," Smiley says. Until the 1960s, shopping centers had green plazas called "malls," until it became a term for the enclosed center itself.
"The genealogy of the word 'mall' is a landscape term — a pedestrian space. But we've co-opted that term and linked it to retail," Williamson says.
In coming years, she predicts that many malls will downsize the amount of surface parking they offer, and turn it into public space that can benefit the surrounding community.
> Ethnic malls are shopping centers that target a specific ethnic demographic in the community. She says this type of customized mall can thrive more than a traditional mall, because it better meets local shoppers' needs.
> Unlike small suburban centers aimed at shoppers who live nearby, destination malls look to attract shoppers from the entire region.
Destination malls, also called "super-regional malls" or "lifestyle centers," use experiential attractions to subsidize regular retail shops. They usually include attractions like movie theaters, bars, casinos, restaurants, rock climbing walls, laser tag, and even roller coasters.
"People will drive miles to these malls, because they will be destinations
"The emergence of entertainment as part of the shopping mall is becoming very important," Smiley says. "It keeps people in the center longer. And even if they weren't going to shop for something, they get lured in."