NEW YORK — Rising fuel prices might be weighing heavily on the minds of homeowners, but for now, mall operators aren’t that concerned. At least, not about how to heat their properties.
“Two weeks ago I was at an International Council of Shopping Centers meeting with some of the biggest owners in the business, and energy concerns didn’t come up at all,” said R. Webber Hudson, executive vice president of Related Urban Development. Related owns 1 million square feet of retail within the Time Warner Center in New York and City Place in West Palm Beach. “I think about gas prices every morning as a consumer, as an individual. But as an operator, we’re always looking for any way to eke more efficiency out of our business and tweak our business model where we can, but there is nothing specific on an operational level that we’re doing right now because of the current oil issue.”
Hudson’s sentiments were echoed by a spokeswoman for Westfield Group, who said the company “is always taking looks at how to lower operating costs,” but is not currently concerned with the issue of rising energy costs.
One of the nation’s biggest developers, Simon Property Group, declined to comment.
But although mall operators seem relatively unconcerned about rising energy costs, they clearly are weighing on consumers’ minds.
An ICSC study that surveyed households said that roughly half of them were moderately concerned with paying their heating bills this winter.
They should be. According to the Energy Information Administration, a government agency that provides energy statistics, households using heating oil or propane can expect to pay more than 30 percent more this winter on heating costs. Should the winter be especially cold, the costs would be significantly higher. On a positive note, the average price of gasoline has crept back from the record average high of $3.07 per gallon in the beginning of September, but year-over-year, it is still up about 34 percent.
But perhaps because September same-store comps demonstrated little slowdown — specialty retailers tracked by WWD posted the highest aggregate increase in the month with a 5 percent rise, while department stores grew by 1.4 percent — mall owners aren’t worried right now about people paying their utility bills or filling their tanks instead of shopping.
“The real breaking point is when we see what the pulse is on holiday in the second or third week of December,” Hudson said. “If the consumer all of a sudden runs out of money because they’re spending it at the gas pump, or if the merchants have to hike up prices to cover incremental energy costs, then we’re going to have that discussion.”
Gas and oil prices are only one element affecting shoppers, of course — though retailers are discounting items to keep sales high — the emotional toll of the hurricanes in the southeastern U.S., the war in Iraq, and the earthquake in Pakistan are slowing frivolous spending while encouraging people to give generously to charitable donations. “The pie is only so big. That $100 that goes to the Red Cross has to come from somewhere,” said Hudson.
According to ICSC, 65 percent of American households reported giving money to Hurricane Katrina relief efforts, though most of those who gave money for relief said they did not alter their other spending.