Speculators are betting hundreds of millions of pounds on the high street malaise spreading to out-of-town shopping malls.
City punters have placed a £100 million bet against one of Britain's biggest shopping centre groups as the retail sector braces itself for one of its most turbulent times ever.
Until recently, malls were thought to be more compelling destinations for shoppers – and so more insulated financially.
But investors have taken out contracts on shares in centre operator Intu which means they will benefit financially if the price falls – known as 'short positions'.
Intu, where almost 5 per cent of the shares were held under short contracts, owns high profile shopping centres such as Lakeside in Essex, Trafford Centre in Manchester and Newcastle's Metrocentre.
Other property operators linked to the retail sector have also been targeted by short-sellers.
NewRiver – which operates dozens of centres in locations ranging from Darlington to Kilmarnock to Penge in South East London, and is valued at £762 million – now has 5.6 per cent of its shares held by short sellers, about £43 million.
Meanwhile, activist fund Elliott has built up a £110 million short position across property giants British Land and Land Securities.
New York-based Elliott also built up a stake of 5.3 per cent in Intu rival Hammerson earlier this year to press for a change in strategy. Hammerson, which owns the Bullring in Birmingham and Bicester Village in Oxfordshire, launched an aborted merger with Intu late last year.
The biggest Intu short position is held by hedge fund mogul Crispin Odey through his firm Odey Asset Management. At almost 2 per cent of the company's value, it is now one of Odey's top five largest London stock market short positions.
His largest is in Debenhams where he increased his position to 7.1 per cent last month. The fates of shopping centres and department stores are bound together because the likes of House of Fraser, Debenhams, John Lewis and Marks & Spencer have for decades been regarded as 'anchor tenants'.
They were seen as bedrocks by landlords who offered them sweetheart deals on the basis that their household name would attract dozens of other stores, cafes and restaurants.
But the damage inflicted by online shopping has blown a hole in the department store business model – and the sector's profits.
House of Fraser collapsed last month, needing a rescue package by Sports Direct owner Mike Ashley. Debenhams profits have dwindled, with speculation that it may be forced to consider a closure programme – known as a CVA – if profit falls further. And last week John Lewis said profit in its first half all but vanished.
Ed Meier, equity fund manager at Old Mutual Global Investors, said: 'There is a reason they are called anchor tenants and, if the anchor goes, it's a big problem.
'A lot of these companies have struck leases at the wrong prices.'
He said 'larger, smarter' shopping centres are adding new elements to attract more shoppers for longer visits. Other sources said some are turning unpopular centres into housing and flats.
Meier said investors are now demanding boards present three to five-year plans – citing clothing chain Next as an example of best practice in the retail sector – to provide evidence that retail-focused businesses are equipped to benefit when the environment improves.