By now it’s quite clear that the resurgence of physical retail is not just a passing trend. Certainly, top U.S. retail properties saw shoppers and sales come roaring back last year as people returned, eager for the in-person experiences they missed after two long years of restrictions.
But strong sales across a wide variety of categories, not only those made newly important post pandemic, and similarly robust leasing activity, persist at the country’s A-quality retail properties well into 2022. This is true even as newer pressures including higher inflation and rising gas prices impact consumers. Why?
Macerich, which owns some of the country’s best-known retail assets – from luxury leader Scottsdale Fashion Square in Arizona and Santa Monica Place near the beach in LA County to East Coast powerhouses Queens Center and Kings Plaza in New York City and Tysons Corner Center just outside Washington, D.C. – has an interesting take on this phenomenon.
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CEO Tom O’Hern offers his view that a key reason Macerich properties are preferred places for retailers, brands, shoppers and communities is that the company embraces beliefs that align with their own, prizing environmental and social action geared toward meaningful change.
How do Macerich’s environmental, social and governance (ESG) priorities fit with how retailers approach these same issues? What about shoppers and communities?
Everything starts with our A-quality properties in A-quality locations. After the past two years, as people increasingly prioritize the best in-person experiences, from dining to travel to where they shop, Macerich’s outstanding regional town centers continue to benefit. This marked realignment of consumer preferences and behaviors absolutely is accelerating the swing to fewer, better properties that retailers, brands, shoppers and communities see as must-have locations. Macerich’s high-quality assets in top markets are the critical differentiator for our company, driving long-term value and success.
But we also know that value is derived from owning properties with purpose: We are focused on the protection of natural resources and ensuring our spaces are welcoming gathering places for everyone. We continue to work toward our goal of achieving carbon neutrality by 2030, two decades ahead of the Paris Agreement, and we have an ongoing commitment to waste diversion and responsible water usage. We also are sharply focused on our opportunity to champion industry-wide change by embracing inclusion and embedding DEI practices in the way we do business.
Macerich’s fully integrated, forward-thinking ESG approach is a real match with how the world’s best retailers also approach these critical issues. There are countless examples, large and small, across our portfolio. Louis Vuitton, with stores at Santa Monica Place and an expanded location at Scottsdale Fashion Square, for instance, reduces the impact of its window displays by using recycled, recyclable and repurposed materials. ALO Yoga uses the most earth-friendly, low-water dyes for its clothing; M.A.C invites shoppers to choose a complimentary new lipstick upon returning six empty M∙A∙C makeup containers to keep plastic out of landfills; lululemon, like Macerich, is committed to Science Based Targets designed to ensure emissions reduction targets are on track to halt global temperature rise at 1.5°C; and, when you pick up food at Chipotle, the app calculates the carbon footprint of your specific to-go order. The list of great brands at our properties across a wide swath of categories with demonstrable ESG values is long and growing longer every year.
And it’s not just retailers: People and communities share many of these same environmental and social priorities. Increasingly, people are choosing to make purchases from brands that align with their own values. Shoppers today are looking at how what they buy affects “us” rather than only how it affects “me.” This is a marked shift that seems to transcend differences in generation, gender and socio-economic backgrounds, and Macerich and our properties are well positioned to continue to appeal to “us”-focused shoppers, neighbors and communities, thanks to our longstanding industry leadership in sustainability and comprehensive ESG commitments.
We are proud to be a good company that does good for people, communities and the planet. We have always believed this is the way to run a good business, too.
Macerich describes its top properties across the country as regional town centers – what does this mean?
Our regional town centers are properties with purpose: places with more uses and more meaning for more people. In the past, shopping centers were exactly that, places to shop. Now, Macerich’s regional town centers – well-located, mixed-use real estate in great markets – deliver more reasons for more people to spend time with us, all throughout the day and evening. Powerful, symbiotic uses that benefit retailers and each other range from multi-family residences and commercial and medical offices to hotels, wellness destinations, grocery and other high-traffic everyday uses, co-working, more large-format entertainment, art and other experiences.
Regional town centers are physical places at the heart of their communities where people come together to shop, eat, play, stay, live, work, discover, explore and more – including to find connection, community and inspiration. They are valuable hubs for economic activity and job creation. They are non-religious, non-political places for people to see neighbors and do good in their own communities.
Throughout 2021, Macerich properties hosted more than 1,800 events for local communities: health and wellness events like blood drives and yoga; movies and concerts in the park; backpack drives to support education; cultural events that fit the needs and identities of our local markets; and Earth-centered events like recycling drives and farmers markets.
What we’ve learned is that people crave shared physical spaces to simply ‘be.’ That’s the beauty of physical retail settings and people have never appreciated regional town centers more than they do today coming out of these difficult years.
How have you evolved your ESG agenda in response to Covid and other challenging issues that have arisen over the past couple of years?
Macerich has always put people’s well-being first and we have continued to prioritize human needs, while also actively working toward the environmental goals that make us the industry leader in sustainability year after year. We’re proud to have achieved the #1 GRESB ranking in the North American Retail Sector for seven straight years (2015 – 2021), CDP Climate “A List” status for many years running, plus a number of other notable environmental accolades and accomplishments. It’s important to us that reaching our goal of carbon neutrality by 2030 will help reduce the real estate industry’s 40% share in all greenhouse gas emissions.
As Macerich continues to lead in sustainability performance, all along the path to 2030 we are equally committed to forwarding constructive social change. We do this by creating positive experiences and impacts for people and communities. This starts by welcoming all people, whether to be part of our vibrant workplace culture or to enjoy our properties.
In shaping the future of our A-quality real estate, we remain firmly dedicated to advancing environmental goals, social good and sound corporate governance on every part of the journey.