Forever 21’s Exit Might Be the Best Thing to Happen to Malls in Years

Many believe the vacancies will be quickly backfilled with better-performing tenants willing to pay higher rents.

Jordan B.
March 26, 2025

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Good morning. Forever 21’s collapse may be bad news for fast fashion—but it’s opening doors (literally) for mall owners ready to cash in on stronger tenants.

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Market Snapshot

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10Y Treasury

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*Data as of 03/25/2024 market close.

opportunity knocks

Mall Owners See Opportunity in Forever 21’s Bankruptcy

Forever 21 is closing all its roughly 350 U.S. stores. Photo: Paul Kitagaki Jr./Zuma Press

The struggling fast-fashion retailer is closing all 350 U.S. stores, but landlords are eyeing the shake-up as a chance to secure stronger tenants and higher rents.

Welcome change: Forever 21 is shuttering all 350 of its U.S. locations after a second bankruptcy filing, creating one of the largest mall real estate reshuffles in recent years. But instead of bracing for a retail apocalypse, many mall owners are welcoming the change as a chance to lease to stronger, more profitable tenants.

Map Shows States to Be Hardest Hit by Forever 21 Store Closures

Why landlords are smiling: Malls, especially at the high end, are enjoying rising rents and near-full occupancy. Even second-tier centers are seeing improved leasing activity. With virtually no new malls under construction and weaker properties still closing, landlords now have the upper hand.

Between the lines: Pacific Retail Capital Partners CEO Steve Plenge, whose company operates 10 malls with Forever 21 stores, expressed confidence in re-leasing the space. The goal? Bring in better brands with higher sales and rent potential—think TJ Maxx, Dave & Buster’s, or trendy restaurateurs.

Case in point: Westfield mall operator URW had planned to divest most of its U.S. holdings but is now keeping a dozen of its highest-performing properties. Tenant sales are outpacing inflation, and vacancy rates are the lowest since the company acquired Westfield in 2018—a sign of robust demand for mall space.

Recovery still has gaps: Despite the optimism, the industry isn’t fully back to its 2016 peak. Department store closures continue to leave difficult-to-fill holes, and many lower-tier malls are either closing or on life support. However, with virtually no new enclosed malls being built, the supply crunch is giving existing landlords much-needed leverage.

➥ THE TAKEAWAY

The big picture: Forever 21’s demise isn’t a sign of mall decline—it’s a signal of reinvention. As weak tenants exit and demand outpaces supply, surviving malls are poised to attract better brands, stronger rents, and more foot traffic. The reshuffle could mark a turning point for a beleaguered sector finally finding its footing.

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✍️ Editor’s Picks

Keep more, pay less: Learn how to defer taxes, reinvest gains, and avoid costly mistakes with a 1031 exchange. (sponsored)
Fast track: A new bond tool is helping Texas developers secure infrastructure funding in months instead of decades, unlocking over $1B for major projects since 2023.
Next generation: Jon Paul “JP” Pérez has been promoted to CEO of Related Group, taking the helm of Miami’s largest condo developer from his father, Jorge Pérez.
Going public: SmartStop Self Storage aims to raise up to $972M in its NYSE debut, betting on investor appetite for self-storage amid a mixed IPO market.
Value plunge: One Lincoln was traded for $400M at a foreclosure auction, a sharp drop from its $1B refinancing in 2022, as Boston’s office market grapples with record-high vacancies.

🏘️ MULTIFAMILY

Rights reversed: The new FHFA head rescinded the Biden-era tenant protections tied to Fannie and Freddie-backed multifamily loans, citing compliance burdens for landlords.
Baltimore's balancing act: A slight slowdown is expected in Baltimore’s apartment market as new supply pushes vacancies up, though suburban demand and affordability keep investment prospects strong.
Colorado condo push: A bill easing construction defect laws to boost condo development clears a key legislative hurdle, aiming to revive a market that has shrunk to just 3% of the state’s housing stock.
Faith meets housing: The Diocese of Orange won approval to build a 21-unit apartment complex in La Habra, despite opposition from neighbors and affordable housing advocates.
The multifamily era: Affiliated Development landed an $80M loan for The Era, a 400-unit multifamily project in Fort Lauderdale, as lenders stay bullish on South Florida rentals.
Betting on Redmond: AvalonBay is planning a 2,500-unit residential village next to Microsoft’s redeveloped headquarters, leveraging transit access and Redmond’s growing tech hub.

🏭 Industrial

Border boom or bust: Industrial growth along the Texas-Mexico border has surged 18% in five years, but looming USMCA renegotiations and shifting trade policies could slow momentum.
Green-powered growth: STACK Infrastructure secured $4B in green financing to develop a 1 GW data center campus in Virginia, reinforcing its global expansion strategy.
Southeast surge: Fueled by population growth and strategic infrastructure, the Southeast has absorbed 545.1 MSF of industrial space since 2019, with demand stabilizing after a record construction boom.
Multistory milestone: Innovo’s latest project, The Borden Complex, is reshaping NYC’s industrial sector with 1 MSF of warehouse and media production space.

🏬 RETAIL

SanTan Expansion: A $145M, 300 KSF retail development featuring Whole Foods and House of Sport is breaking ground in Gilbert, AZ, as part of a larger 600-acre master plan.
Retail deal of the day: Mx3 Ventures acquired the 125 KSF Yorba Linda Town Center for $55.7M, reflecting Orange County’s strong retail demand amid limited new supply.
Walmart slice: Nozzleman Pizza is expanding into 17 Walmart locations across six states, leveraging the retailer’s high foot traffic and offering franchise opportunities with low startup costs.

🏢 OFFICE

Office playbook: The best returns in the office market come from acquiring, redeveloping, and quickly selling properties, as data shows stabilized assets underperform compared to actively managed projects.
Manhattan's boom: Class A and trophy buildings now dominate Manhattan's office market, accounting for 76.7% of 2024’s lease activity as tenants continue the flight to quality.
Plano expansion: Simpson Strong-Tie is leasing 38,400 SF at Granite Park 6 for its second headquarters, with Plano offering up to $800K in incentives to support the move.

🏨 HOSPITALITY

Hotel uncertainty: Hospitality analysts stress patience as market uncertainty, geopolitical shifts, and fluctuating demand make forecasting hotel performance increasingly complex.

📈 CHART OF THE DAY

Industrial construction starts plunged in early 2025, with February down 75.8% YoY and January falling 44%. This sharp decline reflects cautious developer sentiment amid rising rates and cooling demand.