Mall owners seemingly cannot get rid of these properties fast enough as e-commerce proliferates. In April, the share of retail real estate sales hit a five-year low.
Simon Property Group Inc. and GGP Inc., "mall giants," are spending billions revamping the spaces by adding experiences that can't be replicated online, while landlords of less valuable malls are hoping for price appreciation that is unlikely to come, according to Haendel St. Juste, analyst at Mizuho Securities USA LLC. Joe Coradino, CEO of Pennsylvania Real Estate Investment Trust, owner of 21 Mid-Atlantic malls, tells Bloomberg, “It’s a tough environment. I don’t think anybody really anticipated the decline of the department store to happen as quickly as it did," adding, “The sellers are clearly on their knees.”
It’s easy to understand the reluctance to sell now. Prices for malls fell 14 percent in the past 12 months, even as values for other types of commercial properties, such as warehouses and office buildings, rose or held steady, according to Green Street Advisors LLC. At least four properties have been pulled from the market in recent months because the bids were too low, Dobrowski said.