Roth cited decreasing foot traffic and the rise of online shopping as reasons for the sector’s decline, which he said may need to be tackled by shuttering as much as 30 percent of the weakest retail space.
More than 10 percent of U.S. retail space, or nearly 1 billion square feet, may need to be closed, converted to other uses or renegotiated for lower rent in coming years.
In February, a nonprofit called Mercy Housing Lakefront opened 181 units of affordable rental apartments in a building that once housed Sears’s catalog printing plant.
The prevailing theory is that failing brick-and-mortar retailers will mean higher vacancies and bankruptcies for mall operators, with losses inflicted on CMBS holders.
As delinquencies on loans rise, some ratings firms are walking back their grades on bonds tied to properties like shopping malls and office towers, just a few years after assigning them.
The building, which Goldman Sachs had built for itself in the 1980s, sat half-empty for several years after the company left for its current spot at 200 West St. in 2010.
Mudrick is one of a growing number of hedge fund managers who are positioned to profit from a collapse in the sector, which could spur a wave of defaults.
