![]() ![]() “There was clearly a slowdown in retail sales in the back half of the year,” Simon said on the fourth-quarter call. Meanwhile, rents in mall properties across the country will increase by a mere 1.5 percent for existing non-anchor tenants through 2019, according to a recent estimate by Green Street Advisors. More than 20 anchor spaces are set to become vacant in 20, according to the company’s most recent figures. Mil-lion square feet of vacancies across its port-folio due to tenant bankruptcies. Occupancy rates across the portfolio also remained relatively consistent at 95.6 percent in March, compared with 95.8 percent in 2015’s first quarter.įor Simon Property Group, the largest real estate investment trust in the United States, repositioning anchors has become a key plank in a larger strategy to stay relevant amid the ongoing challenges of the retail industry, including a decrease in tourist spending.Ĭonsumers have dramatically altered their buying habits in recent years, as e-commerce explodes and mall occupancy levels decline. The company even raised its earnings forecast for 2016 after beating estimates. The REIT started 2016 on a high note, posting a 15.4 percent uptick in the first quarter of the year over the same period a year earlier in funds from operations, a key measure of profitability. It still needs to be a compelling offering so that it drives consistent traffic to the inline retailers.” ![]() “It’s just the nature of those anchors that’s changed. “The role of the anchor remains the same - to drive traffic to the shopping center,” said Gene Spiegelman, the head of U.S. The hustle to attract more interactive anchor alternatives is emblematic of SPG’s larger push to adapt to a changing environment, boost its traffic and occupancy levels and better cater to the needs of younger and wealthier customers. “We went from, I think, a $10 million Saks to $50 million of revenue generated after repurposing that box.” During a fourth-quarter earnings call, Simon called it a “great example of just taking underperforming Saks that was not attracting the consumer” and repositioning it. The move from straight retail into experiential retail marked an attempt to reinvigorate the space and give consumers, particularly younger ones, more reasons to visit the mall than simply to shop. But it’s now clear that the slow, painful death of the anchor tenant has served as the kiss of life for some of the country’s largest mall owners - and SPG in particular.Īfter taking back the Saks space, the Indianapolis-based real estate investment trust, led by David Simon, inked a deal to bring a nine-screen AMC movie theater, a bowling alley and a bocce restaurant to the space. ![]()
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