Department Stores are going Bankrupt. What this could mean for The Mall in Columbia.

A few headlines from the past month:



Additional retail companies are sure to follow as the crisis continues. Before I dive into what this means for our mall, its important to note that J.C. Penney and J. Crew are filing for Chapter 11 bankruptcy. It's unknown what Lord & Taylor will do. A company filing for Chapter 11 does not mean that the company suddenly ceases to exist and all locations immediately close. Instead, Chapter 11 Bankruptcy allows a company to continue operations while it works to restructure it's business in hopes that it can be saved or sold in order to return to profitability so they can repay their lenders. It's a complicated process that involves a bunch of lawyers in bankruptcy court, but filing for Chapter 11 does not necessary mean that the J.C. Penney, Lord & Taylor, and J.Crew are done-zo.


But let's not kid ourselves. The coronavirus pandemic is only accelerating retail trends that have been occurring ever since Jeff Bezos first started selling books out of his garage in 1994. The future of brick-and-mortar retail is bleak, and it becomes bleaker the longer this crisis goes on. Already teetering on life support, clothing and accessory retail sales just experienced a 89% drop in sales from this time last year. The New York Times ran a feature last month "The Death of the Department Store," which included the following quote from Mark. A. Cohen, the director of Retail Studies at Columbia University's Business School:


“The department stores, which have been failing slowly for a very long time, really won’t get over (this crisis). The genre is toast, and looking at the other side of this, there are very few who are likely to survive.”

It's not just the rise of Amazon, but direct-to-consumer brands like Warby Parker, Bonobos, Everlane, AllBird, Parachute, Stitch Fix, Modcloth and countless others have also taken sales away from the stores you find in shopping centers across the country. Not to mention the big box stores like Costco, Walmart, and Target that have succeeded at the expense of traditional retail behemoths.


While many 1970 era enclosed malls in the country have failed over past decades, The Mall in Columbia has remained economically viable. Being located in one of the richest counties in America certainly hasn't hurt, but it's also done a tremendous job reinventing itself into an experience and entertainment destination while adding an outdoor pedestrian promenade and mixed-use retail and residential buildings to its perimeter. Before e-commerce, department stores had been the anchor that attracts people to shopping centers. Now, people go to shopping destinations for all the things you can't buy online: restaurants, eateries, entertainment venues, personal care services, healthcare, and fitness operations. Things that our mall has in spades.


Once human ingenuity figures out a vaccine, treatment, or other solution that allows us to safely resume public gathering, The Mall in Columbia should continue to be a home for these type of amenity, dining, entertainment, and service-oriented businesses. It's the retail components that take up the majority of the mall's original footprint that I'm more concerned about.



Let's presume this crisis spells the end of the Mall's J.C. Penney and Lord and Taylor (and what if Nordstrom and/or Macy's don't either), then the Mall in Columbia could suddenly have up to five gigantic anchor retail spaces sit empty. It would be a shame to have large areas of the Columbia's urban core go unused, especially when you consider all the wasted space taken up by parameter surface parking lots and garages adjacent to these department stores.


The obvious solution would be to seek out replacement tenants for these spaces. German discount grocery store Lidl is already set to takeover the lower level of the former Sears location that has been sitting empty for nearly 2 years. A warehouse club, Walmart, Target, or other big-box store willing to open at our mall are obvious replacements, but most of these businesses already have nearby locations. A large fitness center or medical facility would work, but I'm having trouble thinking about businesses that could successfully fill all these huge spaces, especially when you consider all the new competing retail spaces coming to downtown Columbia that may be more appealing to potential tenants.


Other uses of abandoned department or big-box scores across the country have been food halls, innovation hubs, international centers, indoor BMV courses, homeless shelters, or religious centers. While we desperately need more school capacity in downtown Columbia, turning a windowless department store into a school or other municipal office use seems depressing.


Yet, this potential dead space could provide an opportunity. Knock down the unused parts of the mall and rebuild. If my prediction that suburban places with city amenities like Columbia become increasingly desirable in a post-Covid world, then we would be in need of more housing to ensure that living in downtown Columbia is attainable for all who want to live here. A decade ago, when the Downtown Columbia Master Plan was developed, restrictive parking covenants with the mall's department stores encumbered large areas where new mixed-use development would logically have been placed. So, instead of starting downtown development with all the surface park lots that surround the mall and developing from the inside-out, the redevelopment of downtown Columbia is happening from the the outside-in, starting with unencumbered land to the south (Merriweather District) and east (Lakefront) of the mall.


Once the Merriweather District and Lakefront development are complete and leased up, then the redevelopment of the parking areas and unused department store spaces at the mall would be the next logical step in further transforming our city's central core into a sustainable people-oriented urban center, especially if the physical, legal, and financial challenge presented by the department stores' leases were to be eliminated.


Update: 11 AM 5/19: Reports from this morning are that Amazon is in talks to purchase J.C.Penney. Rumors also persist that Amazon may buy AMC Theaters. So, maybe the future for The Mall in Columbia will be decided by Amazon.

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