There was recently an article in the Houston Business Journal about the removal of the anchor store in many Houston malls. Kmart, eliminated some stores, so did three other big box stores and some larger consumer electronics and furniture stores, now Albertson’s is gone. Who gets hurt? Franchise stores that pay a high price and rent to be in those centers along with a large anchor tenant. Think of it, Albertson’s with its big superstores with banks next door, Starbucks coffee, bakery, mini diner, film developer and pharmacy. Soon in western states where property and land permit, there will also be on-site car washes and some already have fuel for your car, when you’re a member of the club card. What if I had an MBE, Quiznos, Subway, dry cleaners, travel agency (as if things weren’t bad enough already), GNC, Hobby Town, Cost Cutters, etc.

If your anchor holder moves and traffic dies at the mall, you’re screwed. Right now it’s hard for some small businesses that are not service based and mobile, but imagine the problems when the mall dies for no reason, due to an accounting glitch or cost cuts by a larger corporation that is your primary tenant. And don’t expect anyone to care, because Albertson’s is based in Boise ID and CA. Kmart is the Midwest, and this isn’t like the Kreisge’s 5 and Dime in the old days, today it’s all about quarterly earnings, stockholders’ equity, P&L for the next few months and man, do they give a damn about the area burned behind. Other big retailers are based in the middle of nowhere, like Wal-Mart in Bentonville AR, often moving to better out-of-town locations in a growing area and closing the other stores. Are you sure you want to sign a ten-year space lease? I do not. Those could be the longest and most difficult ten years of your life.

You may want to think about the risks before signing over ten years of lease payments to a mall management company. You may want to consider a reduction if the main tenant suddenly leaves or an escape clause of your choice. Think about it, others didn’t and are still paying.