When Greg Maloney started building malls in the early 1980s, there was only one way to get the project off the ground: sign on a department store.
But it came at a cost. To lure in these so-called anchor shops — the main driver of foot traffic — landlords often had to sell them the land they'd occupy, or lease the space at $1 per square foot.
"Without a department store, ... there would not have been a shopping center to be built," Maloney, now CEO of JLL's Americas Retail business, told CNBC. "We were the ones who were giving sweetheart deals."
Those types of deals are becoming a thing of the past. As major retail chains look for ways to shore up their profitability, they're closing down extraneous stores built during years of overexpansion. According to a new report by JLL, provided exclusively to CNBC, closures from major chains like Macy's and J.C. Penney are pouring up to 37 million square feet of space back into the market.
While the retail industry's contraction will no doubt lead to real estate consolidation, it also provides higher-end malls an opportunity to buy back desirable space that they can modernize for more attractive tenants. Often, those transactions can be quite lucrative for the landlord.
Take Seritage Growth Properties. The real estate investment trust that was spun off from Sears in 2015 has been leasing space to a bevy of new tenants. They include restaurants like Outback Steakhouse, grocers like The Fresh Market and entertainment options like Dave & Buster's.
That redevelopment stands in stark contrast to the dilapidated malls scattered across the U.S., which only tell half the story.
"With everything that is said out there you'd think that it's Armageddon and retail's going to be gone next week," Maloney said.