Mall owners are remaining optimistic about retailers opening stores despite looming recession fears, according to a recent report by CNBC.
Simon Property Group (Indianapolis) recently reported an occupancy rate of 93.9 percent as of June 30 throughout its U.S. outlet centers and malls, which is up from 91.8 percent compared to a year earlier.
On an earnings call this past Monday, Simon Property Group CEO David Simon said, “Even with with what’s going on in the world, we really haven’t seen anyone back out of deals … We’re seeing a big rebound in Vegas, Florida is on fire … California is finding its legs.”
Simon Property Group also mentioned its recent observation in consumer behavior: Shoppers who frequent value-oriented stores are more likely to be spending less, along with younger consumers, whereas luxury or higher-end retailers seem to be faring well. Fast-fashion retailers in its centers, like Forever 21 and Aeropostale, for example, along with department store JCPenney, are seeing “softening sales,” while businesses like Brooks Brothers are maintaining.
Macerich (Santa Monica, Calif.), another mall operator/owner/developer, echoed similar sentiments on its earnings call last week, with CEO Thomas O’Hern stating, “Clearly, there are economic uncertainties due to inflation, rising interest rates and the war in Ukraine … However, we continue to expect gains in occupancy, net operating income and cash flow from operations through the remainder of this year and into next year.”
Macerich has reportedly signed 274 leases in the quarter that ended in June 2022, which is up 27 percent from last year and up another 42 percent in comparison to 2019/pre-pandemic.