Retail Crisis Leads to Increased Mall Vacancies
This has been a devastating year for retail. According to Business Insider, thousands of mall-based stores have or will be shut down this year, causing the largest number of retail closures in decades. Some of the closures include department stores, such as Sears, JCPenney and Macy’s. A recent article on clark.com also states that other chains, including Crocs, BCBG and Abercrombie & Fitch, have also been added to the list of retailers that have been forced to close dozens of their storefront locations this year.
Research indicates several causes for today’s retail crisis with the rise in online shopping being a major factor. Studies also show that people are choosing to spend their money on restaurants, travel and technology rather than accessories and apparel.
Some retailers, such as Bebe, have decided to close all of their stores in an effort to focus on online sales. However, the majority of businesses don’t get that option. Payless and The Limited are just two examples of retailers that have gone bankrupt and been forced to close their doors indefinitely.
These retail closures are causing a downward spiral for the remaining mall tenants as well. Not only do malls lose the income and shopper traffic from the previous store’s business, but the closure often triggers “co-tenancy” clauses that allow the other mall tenants to terminate their leases or renegotiate the terms until another retailer moves into the empty space. According to real estate research firm Green Street Advisors, nearly one third of malls are at risk of perishing as a result of store closures.
With the number of vacant spaces in malls steadily increasing, building owners are scrambling to find new tenants. The truth is that the majority of these vacant spaces will remain unoccupied for a significant amount of time. Depending on the percentage of vacancy, building owners could find some peace of mind with our Lessor’s Risk and Vacant Building products.
Our Lessor’s Risk and Vacant Building products provide a solution for just about every type of retail exposure – commercial buildings being leased or rented to others, 100 percent vacant buildings, partially vacant buildings and vacant buildings undergoing reconstruction. Both products can be written monoline or as a package, and we have no maximum on the length of vacancy. Our products target commercial structures up to 400,000 square feet, property values up to $10,000,000 and renovations up to $5,000,000. We offer primary general liability limits up to $2,000,000/$4,000,000 with no deductibles, and Special Form and replacement cost coverage are available for risks that qualify.
The collapse of brick-and-mortar businesses will continue progressively throughout 2017. In today’s society, it is essential that building owners have the proper coverage in place to protect their investments. Contact your Commercial Lines underwriter to learn more about our Lessor’s Risk and Vacant Building products.
As always, thank you for your support and business!
Contact Cheryl Ryan,
Executive Vice President, Division Leader | 844-438-6775 Ext. 2582
Written by Danielle Conner
June 8, 2017