Dive Brief:
- All indoor shopping malls in New Jersey will close following an order by Gov. Phil Murphy as the government tries to slow the spread of the novel coronavirus through the state. Other non-essential retailers are allowed to stay open until 8 p.m. if they follow the state's social distancing guidelines.
- The state's order comes as San Francisco orders its residents to stay at home as part of a "shelter in place" effort, effectively shutting down discretionary shopping in the city, including at malls, according to local media reports. New York City is bracing for the possibility of similar measures.
- Major malls, including Mall of America in Minnesota and King of Prussia in the Philadelphia area, have shuttered as well. Days before the state order, the new American Dream mall in New Jersey voluntarily closed.
Dive Insight:
As retailers by the dozens move to close their stores, and states and cities take dramatic action to prevent large gatherings, mall closures are to be expected. It's perhaps more curious how many malls are keeping their doors open for the time being. Indeed, some have questioned why so many malls are staying open.
As a company, Simon Property Group has not issued any guidance on its coronavirus mitigation efforts. It has closed its King of Prussia mall under an order by the governor targeting the county that the mall resides in, but otherwise has not issued any releases around large-scale closures.
Chairman and CEO David Simon mentioned the outbreak only briefly in February, on an earnings call with analysts. "[O]bviously we've got a bigger picture going on with the coronavirus and tourism," he said as part of a response to an analyst question not specifically about the virus, according to a Seeking Alpha transcript. "I assume that will be temporary."
Other mall operators, including Taubman (which Simon recently agreed to acquire), Macerich and Washington Prime Group, have not issued press releases about closings due to the virus, either. Macerich did state that it is "monitoring the current situation" of the coronavirus outbreak and is taking additional health and sanitation measures.
In a note last week, Jeffries analysts said that traffic declines could hit malls particularly hard given they house mostly discretionary retailers. And that could lengthen the business recovery for the mall retail sector.
"This is a devastating blow to B and C malls particularly where Sears is long gone, [J.C. Penney] is crippled and Macy's is barely holding on," retail analyst Nick Egelanian, president of retail development firm Siteworks, told Retail Dive in an email. He noted that the indoor mall in his hometown of Annapolis, Maryland, is operating on reduced hours and there are few cars in front of the department stores that anchor the mall.
"This could well be the knock out blow for [J.C. Penney] and what's left of Sears," he said. "With most of the country headed for lockdown, this will get much worse for malls particularly."
