Impact of anchor store closings reverberate
For some malls, effects are still being dealt with
The closure of a department store or any shopping mall anchor can have significant economic consequences for both the retail center and the host community, according to industry experts.
As officials in Manchester nervously wait to see if the Macy’s in the Shoppes at Buckland Hills mall will be among the 150 stores the retailer is closing over the next two years, mall operators and officials in the communities that host the retail centers throughout the state are already dealing with the impact of closures in recent years.
Most of Connecticut’s shopping malls, even those that are successful, have lost at least one anchor over their life span. During the last few months of Lord & Taylor’s existence during late 2020 and the first quarter of 2021, the upscale department store closed its stores at malls in Stamford, Trumbull, Danbury as well as Westfarms in Farmington.
The space in Westfarms that was created by the demise of Lord & Taylor has been turned into Connecticut’s second Jordan’s Furniture that opened in December and a Sally’s Apizza location that will open in April or May.
Other space formerly occupied by Lord & Taylor remains empty and awaiting development plans. Officials at the Danbury Fair mall hope to develop 140 or more apartments in the former department store.
City officials approved a new zone in October 2023 that would allow those plans to move forward.
A somewhat similar scenario is unfolding in Meriden, where city officials are awaiting the redevelopment of the former Macy’s at the Meriden Mall into a medical facility for Yale New Haven Health.
Joseph Feest, Meriden’s Economic Development Director, said while contractors working for Yale New Haven Health have done the interior demolition work on the former department store, the interior work creating the medical space has not started.
“That is a key to saving our mall,” Feest said of the healthcare facility. “It will bring people to the mall that are not coming
there now.”
The Macy's in the Meriden Mall closed in March 2020. That closure came 14 months after Sears closed its anchor store at the mall.
“That has had a huge impact over the years since then,” Feest said of the closures. “Young people used to be able to get jobs at the mall. Now they don't need as many people.”
When a department store in a mall or anchor location closes, “customer counts can drop by 20-to-25-percent,” said Burt Flickinger, managing director of the New York City-based retail consulting firm Strategic Resource Group.
A decline in mall foot traffic can have a cascading effect, said John Clapp, a professor emeritus of real estate at the University of Connecticut.
“It's pretty devastating,” Clapp said. “It's the anchors that draw in a lot of the customers and pay for much of the advertising, which the other stores benefit from.”
If the decline in customer foot traffic is significant enough, Clapp said it can trigger a clause in the leases of some mall tenants that allows for them get a substantial reduction in rent or to leave the mall entirely.
The departure of a department store or mall anchor can also translate into a reduction in a mall's valuation by 50 percent or more, according to Flickinger.
“Commercial real estate taxes fund about 50 percent of local school budgets,” he said. “So there's less money to go around for education.”
The current state of brickand-mortar retail stores has left mall operators with fewer choices to fill the vacancies created when a department store or mall anchor closes, according to Flickinger.
“The are fewer and fewer viable replacements,” he said. “Target has got an appetite for mall store conversions. And Costco and BJ's (Wholesale Club) have had some success with conversions.”