Retail overbuild in US vs ROW

Picture is thousand words… US has overbuild and this excess real-estate is not always not possible to re-purpose. This is going to flow through REIT’s, bank and retailer balance sheet. Separately, many city tax revenues are going to be impacted. Local governments are spending beyond their ability and one day they are going to wake up and cry “uncle” and federal government is going to write trillion $$$ checks.

I don’t think how we compare to others is overly relevant. We shop differently here than much of the rest of the world and much of that has to do with the massive mount of real estate we have to build on (and build in cheaper) You simply can’t drop a new Walmart, much less a small mall, in much of the UK due to both the density of the population and the cost per sq ft. Even as malls falter, we will very likely continue to shop at big box stores (i.e. stand-alone retail) when not online shopping.

This is going to flow through REIT’s, bank and retailer balance sheet.

I think that ship has already sailed - though in many ways they are still finding uses for the now empty real estate.

From 2021:

The pandemic only hastened the downturn. Last November, CBL Properties, the owner of 107 malls, and Pennsylvania Real Estate Investment Trust, the owner of 26, both filed for Chapter 11 bankruptcy. Washington Prime Group — which also owns more than 100 malls — followed suit in June.

Simon Property Group lost its first mall, the Town Center at Cobb, in suburban Atlanta, to foreclosure in February, followed by the Montgomery Mall in North Wales, Pennsylvania, in August.


Don’t believe this hype. They always argued in NYC the real estate is valuable we can convert these empty offices to other use in no time. Now, the cost to convert the existing real-estate to housing (for ex) is so prohibitive, they really don’t know what to do. US is going to have lot of zombie real-estate.

Separately, many in US thinks they are exceptional, special, and operate on different set of parameters. But it is not always true. You can compare US with Australia, or China and see the retail overbuild.

There is so much useless real estate we have, it is not going to be solved by couple of mall operators going down.