The Changing Face of the American Mall

The most influential shopping mall owner in the United States is poised to become even more powerful.

Simon Properties Group, currently the largest national shopping mall owner, has put in a bid to acquire General Growth Properties Inc., which is in Chapter 11 and struggling to emerge from bankruptcy. The proposed price is $9 a share, which, General Growth says, is not enough to get the company out of Chapter 11.

However, if the bid proves acceptable or Simon Properties improves its bid, the implications for national shopping malls will surely alter the status quo. The combined companies’ malls make up one third of the national market, and almost half of the best performing malls.

With a single landlord controlling this number of properties, retailers are concerned that the company will have far too much influence when it comes to dictating leases and rental prices. They’re also concerned about possible negotiations to open new locations in less-than-lucrative malls. It’s in Simon Properties’ best interest to improve the foot traffic to its low-performing malls, which they can achieve by opening a popular store like a Gap to encourage more people to visit.

Retail stores, however, naturally don’t want the expense of running a store in a low-traffic area, which means that Simon’s influence as landlord may prove detrimental to them.

The deal is still in the works, but we’ll be keeping an eye out for a changing mall landscape.

About the author:
Peter Koeppel – Founder and President of Koeppel Direct, a leader in DRTV (Direct Response Television),  radio, print and online media buying, marketing and campaign management.