May 13, 2019
Newport Beach, CA-based Green Street analysis of more than 1,300 publicly and privately-owned U.S. mall and outlet properties revealed key trends in mall operating metrics, quality grades, vacancies, and asset values. In a new report, Green Street’s retail team revised grades for nearly 90 malls.
While most adjustments were downward, the few upgrades focused on malls that are undergoing a major redevelopment to materially improve competitive positioning. Unaddressed anchor vacancies were one of the main factors behind negative adjustments. There are currently nearly 800 vacant anchor boxes at U.S. malls, according to the Green Street report.
Green Street now incorporates proprietary Trade Area Power (TAP) Scores in the evaluation of malls and strip centers. TAP Scores help quantify real estate demand by combining key demographic factors into a single metric, and may serve as a good proxy to vet potential densification opportunities at high quality malls, or alternative uses at middle-to-low quality centers.
One of the key findings was that having the right tenant mix is essential for the success of a mall. Recent changes in consumer shopping behavior, including the increase of online shopping, and the preference for ‘experiences’ over goods, have prompted landlords to reduce their exposure to apparel in of favor entertainment, food and other non-retail concepts.
The closing of hundreds of stores, particularly of large department stores, is also accelerating the transformation of malls, forcing landlords to re-tenant an unusually large portion of their centers. A center’s ability to attract good tenants is being tested more than ever, reports Green Street.
For comments, questions or concerns, please contact Dennis Kaiser