Despite some closures, mall REITs remain strong
At first glance, U.S. malls appear headed for trouble. The retail sales growth seen after the 2009 trough has slowed to low single digits and, according to Green Street Advisors, roughly 10 percent of the more than 1,000 U.S. malls the company tracks will either close or be repurposed in the next decade.
But as it turns out, for mall REITs, business is good.
Though there has been a deceleration in retail sales growth the past couple of quarters, that was preceded by several years of spectacular sales growth and robust occupancy gains. Malls are expected to deliver above-average net operating income during the next several years relative to other property types.
Furthermore, most of the malls expected to close are aging, privately owned “c-malls” that are more susceptible to competition from online merchandise and mass-market retailers. Their closure will not hur