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The internet has become a very merry money maker this holiday season.
IBM Benchmark, which tracks sales data from the websites of more than 500 leading U.S. retailers, finds November online retail sales finished up 15.6% over the same period last year. Mobile traffic rose by 12.6% while mobile sales climbed by 9.7%.
What's become a huge boost to retailers' bottom lines is now coming at a serious cost to shopping malls. The surge in internet shopping activity is putting many of the malls on the endangered list.
Citigroup Global Head Of Real Estate Thomas Flexner said fears of the internet knocking off the weaker shopping malls are finally becoming a reality. More and more retailers are downsizing square footage or closing less profitable stores.
"Once you get away from those class 'A' malls, there is just more risk. It is getting more difficult for tenants to make money, generate and produce sales," said Flexner. "The vacancy rates in the regional mall business are increasing in the lower productive or lower quality malls. And that is also where we see the biggest impact of the internet."
The problems aren't just affecting smaller shopping mall operators. Earlier this year, public real estate investment trust General Growth Properties put a portfolio of secondary malls on the market. It was generally viewed as an effort to prune their less productive assets.
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