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Shopping Malls and Consolidation



The business of owning and leasing out shopping malls ain't what it used to be.

I'm old enough to remember when malls themselves were the hot (and worrisome) new trend, popping up in the suburbs and decimating the business activity in the nearest city. Nobody would bother to go downtown to shop anymore, with such an inviting alternative. How unfair!

I remember the sometimes heated lawyerly discussions about the first amendment implications of the way that malls had become 'functionally' public property, i.e. town squares.

Of course, in the cycle of life one decade's up-and coming phenomenon becomes another decade's old and lagging loser.

Shopping malls are still good hang-outs for teenagers, I imagine, but they aren't such vital places for shopping as they used to be. Many of the once-prominent bookstores, record stores, cinemas, and video retailers that once gave people a reason to go have disappeared as people buy books, music, movies, online. Even clothing stores these days are coming under siege, the advantage of real-space fitting rooms notwithstanding.

Which brings us to the matter of consolidation, and brings us for example to this story on Simon Property.

It seems likely that there will still be some market for malls for some time to come, though it will shrink. And in that shrinking market, former competitors will consolidate. The law will almost certainly allow them to do so.

The interesting questions that arise from the Simon/Mecerich negotiations are about the fiduciary responsibilities of corporate managements in such shrinking industries.



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