Mall owners Simon Property (NYSE: SPG) and Macerich Company (NYSE: MAC) continue to redevelop vacant department stores, creating substantial value for shareholders.
In a recent earnings call, Simon reported that redevelopment activity is moving quickly, and in some cases, much quicker than anticipated. David Simon, Chairman and CEO, said the transformation of Northgate in Seattle, which was originally budgeted to occur next year, will start this summer with the demolition of the mall. The project is truly transformational: The mall will be replaced by an NHL hockey training facility with three hockey rinks and a headquarters for a new NHL franchise. The redevelopment will include residential and hotel uses in addition to office space.
Simon reports that redevelopment activities are under way worldwide across all of the company’s platforms. The company is creating monitored, innovative, live, work, play, stay and shop communities. The properties being redeveloped include 10 former department store spaces, redevelopment projects that are ongoing and more than 25 projects in various stages of pre-development.
In a recent investor call, Macerich stated that being able to recapture unproductive department store boxes within great malls will continue to provide significant redevelopment opportunities for the company. In Kings Plaza, Brooklyn, New York, Macerich replaced an underproductive Sears store with Zara, Burlington, Primark, and JC Penny, which collectively will do five times the sales of the prior tenant. At Scottsdale Fashion Square in Scottsdale, Arizona, Macerich replaced the Barney’s department store with Apple and Industrious, a co-working tenant.