More than 300 malls in the U.S. are categorized as "Class B" malls, according to real estate research firm Green Street Advisors. With their middle-of-the-road sales productivity, mix of national and regional tenants and one or more anchor vacancies, Class Bs are right in that gray area: Some will weather the current storm, but many will not, Bloomberg News reported. Rent and occupancy at B malls were already falling before the pandemic, but they were less likely to have several anchor vacancies or poor sales like the worst-performing malls in the U.S., those Cs or Ds. About 11 percent of B and B+ malls now have two anchor vacancies, while nearly a third of B- malls have two empty anchors or more. When malls have one anchor vacancy and other anchors start to follow, “that’s when things start to accelerate to the downside,” said Zachary Klein, a real estate and leisure analyst at Fitch Ratings. Since many leases include so-called co-tenancy clauses that let other retailers break leases or pay less if key tenants leave, an anchor vacancy can spell more bad news ahead for middle-tier malls. Although many bankrupt retailers continue operating while restructuring under chapter 11, they’re planning to shut down droves of lower-performing stores. All in all, as many as 25,000 stores could close in the U.S. this year, mostly in malls, according to Coresight. That would demolish the previous record of about 9,800 closures, set in 2019.
