New York, NY, November 29--Despite the hoopla over lifestyle centers and other newer shopping center formats, regional malls continue to be the best-performing property type for retailers, according to a new report from ICSC Research titled "The Facts on Regional Malls and What They Say About the Vitality of the Concept."
Mall tenants report industry-leading growth in same-store sales, operating margins and after-tax profits, the report says. For the first quarter, mall retailers' after-tax profits shot up 100 percent. They rose a further 22.3 percent in the second quarter. By comparison, open-air specialty tenants' profits rose only 35 percent during the first quarter and just 19 percent in the second.
Through August, mall specialty stores showed 5.2 percent year-on-year growth in sales per square foot, according to ICSC's monthly mall merchandise index.
Mall occupancy averaged about 92 percent for the second quarter of 2004, up from 89 percent in the first quarter of 2002, the report says. And rents continue to rise, with mall REITs reporting an average re-leasing spread in excess of 15 percent for 2004.
"These facts seem to contradict the 'zero-sum' notion being perpetuated in some quarters that retailers are opting out of regional malls in favor of lifestyle centers and other formats," the report says. "The truth is, lifestyle centers simply add to the menu of location options for retailers that have been traditionally located in malls."
