In-Line Mall Retailers Forego Lease Renewals


In an act of dying without bravado, in-line retailers (non-department store anchor tenants) across the quality spectrum of malls are quietly foregoing lease renewals without making store closure announcements. In fact, a recent study from Green Street Advisors reveals that in 2017 approximately half of the in-line mall retailers that closed bowed out quietly without breaking leases. Because in-line retailers typically pay higher rents than their anchor-tenant counterparts, the closures are a strong indicator of deeper financial challenges mall properties are facing, and space is becoming available faster than it is getting re-filled. Consider these conclusions from the study:

  • Of the 950 malls reviewed approximately 70% had a decrease in in-line tenants.

  • While lower-quality malls are hit the hardest, all malls are being affected.

  • Only half of the top 25 closing retailers have publicly announced store closures.

It's no secret that retailers and their landlords are facing a challenging landscape. However, what does not seem to be making the headlines is the significant systemic risk that unannounced store closures are having on multiple sectors.

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