I’ve been sitting on this story for nearly a month now, but Retail Traffic had an excellent piece in their last issue outlining a trend that most readers of this blog have likely suspected–that malls, especially the big, super-regional centers–have not only proven resilient in the economic downturn but have been performing strongly:
“As the Great Recession unfolded, regional malls—rather than being pushed to the brink—weathered the storm better than any of their supposed replacements. The very things that made fortress malls seem so outdated—their size, their enclosed environments, their dependence on anchors—proved to be powerful assets instead.
Quarter after quarter, U.S. regional mall REITs have outperformed shopping center REITs, beating analyst estimates and occasionally posting NOI growth. By 2010, class-A regional malls shot up to the top of both retailers’ and real estate investors’ list of preferred product types.”
It’s easy to make the case for why this happened. Big box centers relied on too few tenants in number, so when one went belly up, the entire center suffered (and was hard to repurpose). Malls carried a certain sense of place and offered entertainment value (our favorite argument -Ed.), while these other centers didn’t, so they thrived. Most (though not all) of the new “lifestyle centers” failed to achieve a critical mass. Whatever. The point is that we’re seeing a paradigm shift that’s being noted by one of the foremost publications in the industry.
Retail Traffic’s blog did a follow-up after the fact as well. If you don’t follow them, you should–they’re the best source for news in the industry.
*On a related note to the TITLE of this blog post, I made a trip to Phoenix and Tucson, Arizona a few weeks ago, and managed to visit every single mall in those two cities. Look for more content on these in the future.