No. 2 U.S. mall owner General Growth Properties filed for Chapter 11 bankruptcy, along with 158 of its 200-plus malls, in the largest U.S. real estate failure on record. General Growth owns New York’s South Street Seaport, Boston's Faneuil Hall, and Chicago’s Water Tower, among other prominent shopping centers. (Reuters)
What the commentators said
I know what you’re thinking, but “don’t fret,” said Parija Kavilanz in CNNMoney.com. Your local mall isn’t likely to “disappear” due to General Growth’s bankruptcy. According to experts, “it’s very rare for a mall to be shut down.” And unlike in the case of Circuit City, General Growth’s troubles are “finance-related rather than consumer-driven.”
Shoppers might be fine, said Russ Britt in MarketWatch, but this is the “potential first thud” in a commercial real estate market “free fall.” General Growth “dug itself in deep” by borrowing heavily to expand, so its "demise" is no surprise. But General Growth wasn't alone—commercial real estate could be near “its own subprime-like debacle.”
A “domino effect” in commercial real estate is a real fear, said Douglas McIntyre in 24/7 Wall Street, and that's bad news for banks. General Growth owes $27 billion, much of it to Goldman Sachs, Citigroup, and Deutsche Bank. That’s just one mall owner, and “malls are only the tip of the commercial real estate iceberg”—let’s hope banks don’t assume the role of the Titanic.
THE WEEK'S AUDIOPHILE PODCASTS: LISTEN SMARTER
- 7 things the world's happiest people do every day
- Israel has only two choices: Eliminate the Palestinians or make peace
- 9 things you probably didn't know about the moon
- 7 grammar rules you really should pay attention to
- Why are so many parents being arrested?
- What would a U.S.-Russia war look like?
- 29 adorable slang terms for sex (from the last 600 years)
- Why I choose not to be rich
- What if The Purge was real?
- Here's the last time Russia shot down a passenger plane
Subscribe to the Week