UPDATE: March 20, 2020: Taubman has closed 19 domestic shopping centers through March 29, or later if necessary, in response to the spread of COVID-19, the center operator said in a release Thursday. There are only two Taubman centers that are continuing to operate: open-air, street-front center in Kansas City, Missouri, and Waikiki, Hawaii. In some other markets, tenants with exterior public entrances can stay open at their discretion, where permitted by law, Taubman said.
Taubman’s closure announcement follows that of Simon Property Group, which recently agreed to buy Taubman.
- Simon Property Group has moved to shut down all of its domestic retail properties, including malls and outlets.
- The measure took effect at 7 p.m. on Wednesday and will last until March 29, according to a press release.
- The company said that the decision came after "extensive discussions" with federal, state and local authorities as the country tries to address the COVID-19 pandemic.
Simon's decision to close its malls follows that of dozens of retailers — from Nike to J.C. Penney — to shutter all of their U.S. stores through March or beyond as businesses and governments take increasingly dramatic measures to slow the spread of the novel coronavirus in the U.S.
Prior to Simon's announcement, New Jersey's governor had ordered all indoor malls in the state to close. On the other side of the country, San Francisco effectively forced malls to close and ended discretionary shopping as it ordered citizens to "shelter in place." New York City could impose similar restrictions on residents.
Simon had closed its massive King of Prussia mall near Philadelphia under a governor's order for the county where it resides. But until Wednesday's announcement, the company had issued no press releases or statements on what, if any, role it would play companywide in the mitigation efforts. In the U.S., Simon's owned or co-owned properties represent some 181.2 million square feet, according to its annual report. It manages or co-manages 200 properties in the country.
"The health and safety of our shoppers, retailers and employees is of paramount importance and we are taking this step to help reduce the spread of COVID-19 in our communities," Chairman and CEO David Simon said in a statement.
The extent of the disruption to the mall operator and its retailers from the pandemic is hard to gauge. In a report Wednesday, S&P Global analysts said that the spread of COVID-19 could threaten the credit ratings of REITs in North America, including those, like Simon, dedicated to retail properties. Social distancing, travel restrictions and a looming recession could all take their toll, the analysts, led by Ana Lai, said in a press release.
Last week, even before the rash of announced shutdowns and the move indoors by a large swath of America, Jeffries analysts led by Linda Tsai wrote that landlord pricing power was in for a reduction as retailers came under margin and sales pressure.
Reshmi Basu, restructuring editor with Debtwire, told Retail Dive this week that many challenged retailers are negotiating with landlords for rent concessions as they try to maintain liquidity. Those retailers were in an already-difficult environment that just received a massive shock.