As retailers slug it out for market share and the attention of distracted consumers, landlords are taking full advantage of the limited amount of space in A and B malls.
“The vacancy rates have really narrowed,” said Andrew Graiser, copresident of A&G Realty Partners, a real estate advisory firm. “You’re in a world right now where there’s little to no growth in new developments outside of outlets. There are a lot of retailers that are growing, they have no place to grow, so therefore there’s a lot more demand for A- and B-quality retail. The rents are going up.”
All of that is good news for the real estate investment trusts.
“It’s clearly their time,” Graiser said. “Where four or five years ago the retailers had a lot of leverage in the A and B malls, that has definitely swung to the landlords.”
Graiser noted that REITs are focused on improving their best real estate, and in some cases are selling off their C and D malls to smaller players or private companies that can dig in and reinvent the spaces.
General Growth Properties Inc., for one, is laser-focused on the high end of its portfolio.
Sandeep Mathrani, chief executive officer, recently told Wall Street analysts, “We firmly believe that good things happen to good assets, and over the long term, the most opportunity and highest value creation opportunity will be within the high-quality end of the property spectrum. Our mission is to own and operate high-quality retail assets in the U.S.”
Of General Growth’s 123 malls, 73 are considered A malls, and they account for three-quarters of the company’s net operating income and see sales of more than $650 a square foot. Overall, the company saw a permanent occupancy rate of 90.1 percent at the end of the third quarter.
And the net operating incomes at malls don’t necessarily move in lockstep with the retail market as a whole.
“We see almost no or very little correlation between tenant sales growth and our NOI growth,” said David Simon, chairman and ceo of Simon Property Group Inc., on a call with investors. “Due to our ability to replace underperforming retailers, we have good visibility for strong NOI growth over the near term.”
Simon’s comparable property net operating income in its U.S. malls and premium outlets rose 4.9 percent in the third quarter. And the firm’s occupancy rate stood at 95.5 percent with total sales per square foot of $579.
“Azzedine has been one of the biggest influences in my life. He has always been such a strong, loving, fatherly figure to me. I call him Papa. His designs are indescribably unique, they are pieces of art. He knew how to make the female form look its loveliest. I have so many memories of him; my favorite might be during my first show with him in Paris. He liked me and he wanted to help me get more work. He called all his friends at Kenzo and Comme des Garcons, and asked them to book me. They said, ‘But she can’t walk!’ And he said, ‘but she has such a great ass!' His friendship and support has been the great privilege of my career. I can't imagine life without him. Repose en paix mon Papa.” - @stephanieseymour tells @wwd. #wwdfashion (📷: @steveeichner) #alaia #azzedinealaia
Azzedine Alaïa, flanked by two of his closest friends, models Stephanie Seymour and Naomi Campbell.
He designed Seymour’s dress for her 1995 wedding to Peter Brant, and treated Campbell (who famously called him Papa), like a daughter. For more on the legendary designer, tap the link in bio. #wwdfashion #alaia #azzedinealaia
Azzedine Alaïa's “I-did-it-my-way” ethos stood out starkly at a time when brands are experimenting with consumer-facing fashion shows, coed formats and trans-seasonal collections – anything to perk up lackluster sales of ready-to-wear in an age of Insta-everything. “It’s not creation anymore. This becomes a purely industrial approach,” the late designer told WWD in an interview last year. “But anyway, the rhythm of collections is so stupid. It’s unsustainable. There are too many collections.” Read more about the iconic designer’s life and work on wwd.com, link in bio. #wwdfashion #azzedinealaia (📷: @WWD Archive, 1986) #alaia
Sneaker reselling app @goat’s latest exhibit, "The Greatest: New York," tells the story of New York's sneaker culture. To celebrate the exhibit, an intimate crowd gathered on Thursday night at the pop-up gallery space, located at Platform in Culver City, to hear guest speaker and illustrator @esymai talk about her own rise in streetwear and women in the business. "For me I'm just someone who is creative. I like to create things," said Chang. #wwdfashion
Azzedine Alaïa, one of the most iconic couturiers of the modern era whose body-con designs defined Eighties fashion, has died in Paris. The diminutive Tunisian-born designer, known for his structured knitted dresses with fitted waists and impeccably cut, figure-hugging second skin silhouettes was deeply admired by his peers, and counted supermodel Naomi Campbell - his adoptive daughter - among his inner circle, one of a gang of glamazons including Farida Khelfa, Carla Bruni and Stephanie Seymour who became ambassadors of his style. (📷: Alexandre Guirkinger) #wwdblast