After a decade of decline, America's shopping centers have reported a 13% increase in value over the past year, according to real-estate research firm Green Street. This growth outpaces other property sectors and marks a significant recovery in the commercial market. Factors contributing to this resurgence include increased foot traffic from younger generations and the adaptation of malls to include more diverse offerings such as luxury brands and entertainment options.
Ronald Kamdem, head of US REIT and commercial real-estate research at Morgan Stanley, stated, "In terms of how we think about the malls today fundamentally, this is probably the best it’s felt post-COVID," as reported by the Wall Street Journal.
Since 2008, approximately 200 malls have closed, leaving around 900 operational. The remaining malls are evolving into tourist destinations, with the top five attracting millions of visitors annually. For instance, Minnesota's Mall of America and New Jersey's American Dream each draw about 40 million visitors per year, aided by attractions like indoor ski slopes and extensive retail options.
Simon Property Group has seen its stock surpass previous highs, reflecting the positive trend in mall performance. Unibail-Rodamco-Westfield, which had previously planned to exit the US market, is now investing nearly $1 billion to gain full control of several properties, indicating renewed confidence in the sector.
CBL Properties, which faced bankruptcy during the pandemic, has also made a comeback by shedding underperforming malls and acquiring new ones. Its stock has increased by 48% since January.
Despite the positive outlook, some analysts remain cautious. Bob Neighoff, a portfolio manager at Mariner Investment Group, expressed concerns about the sustainability of the current growth, particularly regarding the reliance on restaurants and entertainment venues to fill vacant spaces.
The turnaround is evident in properties like CBL’s West County Center in St. Louis, where tenant sales have risen by 13% since 2023, and plans for refinancing are underway. CBL's CEO, Stephen Lebovitz, noted the significant improvement in property performance, stating, "We’ve just seen this real strengthening of the property."