Green Street Advisors

 

 

CNBC: While you've been paying attention to failing malls, these shopping centers are thriving

According to CNBC:

As Macy's and Sears close hundreds of stores, the divide between America's best and worst malls is widening. But it isn't only the weakest properties that are losing ground.

Just as retailers shutter stores to funnel resources to their most coveted spaces, major mall owners are doing the same. Having already sold off many of the weak links in their portfolios, operators like General Growth Properties and Simon Property Group are now pouring money into their existing centers — in a bid to make them even more powerful.

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"The highest-quality malls will always have a retailer that wants to be in their center," Jim Sullivan, president of the advisory and consulting group at Green Street Advisors, recently told CNBC. "As you move down the quality spectrum things start to get dicey."

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Indeed, just 20 percent of the country's best malls generate nearly three-fourths of mall revenues. That makes it possible for their owners to funnel more money into upgrades. Financing for "A" malls also remains available and at attractive pricing, according to Green Street's 2017 Mall Outlook.

It's harder for struggling malls to turn themselves around, as their declining economics make it difficult to find cash for investments. In its same outlook report, Green Street noted that lending standards have tightened further outside of the "A"-mall space, as lender criteria have become more and more stringent.

Malls with less than $400 per square foot in sales "must check other boxes," like being the best retail option in a small market, Green Street said in its report. Otherwise, these properties are being shut out of the commercial mortgage-backed securities market and forced to seek financing through banks, smaller insurers or debt funds.

According to Green Street's 2017 Mall Outlook, there are more 300 malls in the U.S. that are considered "C" quality. They are the most at risk of closing over the next several years, the report said.

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To read the full article from CNBC, click here.