Shopping Center Business

The Canton Centre Mall in Canton, Ohio is boarded up and vacant.

All across America, once-vibrant shopping malls are boarded up and decaying.

Traffic-driving anchors like Sears and JCPenney are shutting down stores, and mall owners are having a hard time finding retailers large enough to replace them. With a fresh wave of closures on the horizon, the problem is set to accelerate, according to retail and real estate analysts.

About 15% of U.S. malls will fail or be converted into non-retail space within the next 10 years, according to Green Street Advisors, a real estate and REIT analytics firm. That's an increase from less than two years ago, when the firm predicted 10% of malls would fail or be converted.

"The risk of failure for a mall increases dramatically once you see anchor closures, " said Cedric Lachance, managing director of Green Street Advisors. "Their health is very important ... and most of them are highly likely to continue closing stores."

Within 15 to 20 years, retail consultant Howard Davidowitz expects as many as half of America's shopping malls to fail. He predicts that only upscale shopping centers with anchors like Saks Fifth Avenue and Neiman Marcus will survive.

"Middle-level stores in middle-level malls are going to be extinct because they don't make sense, " said Davidowitz, chairman of Davidowitz & Associates, Inc., a retail consulting and investment banking firm. "That's why we haven't built a major enclosed mall since 2006."

This building once housed a Macy's, which closed in 2008 and has since remained untouched:

Nicholas Eckhart

Of the roughly 1, 000 malls in the U.S., about 400 cater to upper-income shoppers, he said. For those higher-end malls, business is improving, according to data from Green Street Advisors. It's the lower-end malls that are being hit by store closures.

JCPenney, Macy's, and Sears have all recently announced fresh rounds of closures and layoffs. JCPenney is closing 33 stores, Macy's is closing five, and Sears is closing its flagship in Chicago — the latest of about 300 closures Sears has made since 2010.

As those retailers vacate their hulking, multi-story spaces, mall owners are aiming to replace them with movie theaters, restaurants, and discount retailers like TJ Maxx, Ross Stores, and Marshalls, analysts said.

But if a mall is hit by two or more anchor closures at once, it's harder to stay afloat. That's typically the beginning of a downward spiral leading to ultimate extinction, Lachance said.

Most struggling malls don't go down without a long, drawn-out fight, however — the evidence of which exists in hundreds of communities across the country where vacant wings of various shopping centers are beginning to crumble and decay. States hit particularly badly include Texas, Pennsylvania, Ohio, New York, and Illinois, according to Deadmalls.com, which tracks mall closures.

Here's the interior of Rolling Acres Mall in Akron, Ohio, which has been closed since 2008:

Nicholas Eckhart

"Malls will go broke, will go dark, will get closed — and it will take eight years for something to be redeveloped, " Davidowitz said.

Don Wood, the CEO of Federal Reality Investment Trust, has said the process of knocking down or converting a mall could take as long as two decades.

"It’s really going to be hard in the next 10 years to knock down that mall and rebuild it into something better because the economics just don’t work, " Wood said at a conference in June 2012, according to The Wall Street Journal. A failing mall in a non-affluent market "most likely will just stay there and get worse and worse over the next 20 years."