Concerns linger regarding the fate of malls in the United States, even as the sentiment among retail real estate professionals remained upbeat at this year’s ICSC RECon, held at the Las Vegas Convention Center in Las Vegas, Nevada.
America’s nearly 1,200 malls will likely be reduced to 600, according to Carl Tash, chief strategist at Starwood Retail Partners. And in some cases the malls that survive will be those that have transformed into completely different uses. Tash notes, for example, that one Starwood mall — Fair Lane Towne Center in Dearborn, Michigan — saw nearby Ford Motor Corp.’s research and development division expand its offices into the mall, overtaking a vacant Lord & Taylor store.
At another property in Nebraska, a local community college is weighing holding classes in a former Bon-Ton location. Joseph Coradino, chairman and CEO of mall owner PREIT, said his firm shed 17 malls in secondary and tertiary markets, which has helped boost its sales to $385 per square foot from $340. He said that the REIT continues to prune its portfolio where needed. “The mall space is changing at a blistering pace,” he noted.
Other firms are also trying to shed properties, but Coradino said the pool of buyers has shrunk and cap rates have risen. PREIT also continues to change the tenant composition at its malls, according to Coradino, shifting from apparel retailers to mixed-use opportunities.