The good news: Mall owner Brookfield Properties believes a recovery is in sight for many of its shopping centers. The bad news: It’ll take more retail Darwinism to get there.
On Friday, the mall operator reported that key metrics trended up and to the right in Q3:
- Foot traffic returned to around 70% of pre-pandemic levels and most stores reopened.
- Sales at luxury, fashion, and jewelry tenants rose between 13% and 36%.
Still, only ~75% of tenants made rent last quarter, resulting in a $135 million hit. So Brookfield’s making further cuts following a 20% retail headcount reduction in September. CEO Brian Kingston said underperformers from its roster of 170+ malls could soon close to focus on high-end, centrally located properties.
Why it matters: We’re no longer wondering whether malls will survive at all, but which malls could make Jeff Probst proud.
- Malls in urban, affluent areas are proving more resilient, while malls without wealthy customers have lost steam.
- Case in point: Two heavyweights in the so-called “B class,” CBL Properties and Pennsylvania Real Estate Investment Trust (PREIT), both filed for bankruptcy last week.
Source: Retail Brew