A number of prominent U.S. "brick and mortar" retailers have recently filed for bankruptcy. These include department store giant J.C. Penney and specialty retailers JCrew, Neiman Marcus, Lord & Taylor and Brooks Brothers. This article by Forbes suggests many other national brands are hanging by a thread as 2020 drags on, and the amount of retail closures could rival the post-Great Recession period. While the COVID-19 pandemic is an added stress factor, these trends predate 2020. Other real estate sectors have rebounded post-recession, but retail, and especially regional shopping malls, have continued to decline in value. Most department store chains are closing stores, seeking bankruptcy protection, or both. Empty anchor store spaces are a major drag on foot traffic at malls. Vacating anchors can create a ripple effect where inline tenants demand lower rents or seek to move to rent based on a percentage of sales only.
The continuing downward trend has major implications for tax assessments of malls and shopping centers. If you feel like your retail property is not being fairly assessed, please do not hesitate to contact The Gibbs Firm.