Tuesday's news of Sears closing its flagship downtown Chicago store comes on the heels of closings announced by Macy's and J.C. Penney, and is followed by today's word of job cuts at Target HQ.
These are just the beginning (continuation really) of a wave of similar actions likely to cause an average shrinkage in overall retail square footage of between one-third and one-half over the next 5-10 years, says Excess Space Retail Services' Michael Burden.
"Stores are making a long-term bet on technology," says Belus Capital Advisors analyst Brian Sozzi. "It simply doesn't make strategic sense to enter a new 15-year lease as consumers are likely to continue curtailing physical visits to the mall."
Keep an aye on the shopping center vacancy rate. It rose 550 basis points to 11% in the Great Recession, but has since recovered to just 8.9%. Will it make a higher high in the next downturn?
Within the closings is another trend - indoor malls are faring worse than outlet centers, outdoor malls, or stand-alone stores. Without a major reinvention, says Rick Caruso of Caruso Affiliated, traditional malls will go extinct. He's unaware of an indoor mall being build since 2006. "Any time you stop building a product, that's usually the best indication that the customer doesn't want it anymore."