In buying Forever 21, mall owners buy themselves some time
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Have you ever been to a mall that’s just barely holding on? It’s unsettling. You see metal grates guarding empty stores, undressed mannequins in the window, dust bunnies on the floor.
And it can all start with the closure of one big store.
“The bane of a landlord’s existence is a dark store, a vacant store,” said Mark Cohen, director of retail studies at Columbia Business School. “It devalues their property. It renders their property less attractive to customers.”
And a closure can have a domino effect. It’s hard for small retailers that relied on the big store’s foot traffic to stay in business.
So it’s not entirely surprising that the mall operators Simon Property Group and Brookfield Property Partners, along with the brand licensing firm Authentic Brands Group, have agreed to purchase the assets of Forever 21, the bankrupt clothing retailer, for $81 million.
Forever 21 stores are often large, with multiple floors. Also, nearly half of the malls owned by Simon Property Group and Brookfield have a Forever 21 in them.
Not to mention, the mall landlords have “already got their hands full with Sears and [J.C. Penney] and Macy’s, and a whole host of other retailers who are either going out of business or closing unproductive or less productive stores,” Cohen said.
Buying Forever 21 buys these mall landlords some time, said Sucharita Kodali, a retail analyst at Forrester.
“It may give them a chance to rejuvenate the brand or if they need to find alternative tenants,” she said.
In the meantime, the lights stay on. The rent gets paid. And as for Forever 21?
“I think that it’s unlikely that they will ever reach their peaks again. I think that everybody must realize that that is a near impossible goal,” she said.
Simon Property Group and Brookfield have done this before. In 2016 they bought the bankrupt clothing chain Aéropostale. Since then, it has reopened more than 500 stores.
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