LA malls exceed national average with $800 psf in annual sales

Los Angeles shopping malls, in general, are making money.

L.A. malls, with their numerous upscale retailers, outperform the national average, Bisnow reported, citing figures from Green Street.

Local malls generate an average of $800 per square foot annually, compared to the U.S. average of $600 per square foot. Occupancy is 90 percent, compared to the nation’s 86 percent average. 

Of the nearly 30 malls within its limits, two-thirds are rated A by Green Street.

“[L.A.] is one of the most competitive markets in the nation,” Emily Arft, a retail analyst with Green Street, told Bisnow.

While many malls across the U.S. and Southern California have struggled with shuttered anchor stores and declining foot traffic, Los Angeles malls have one advantage: luxury.

Upscale retailers have boosted average sales, and have created a critical mass that builds on itself.

“Luxury retailers love the clustering effect. They really only want to sell where other luxury retailers have sold,” Arft said.

While the top malls will likely be viable draws a decade from now, there’s still trouble afoot.

The Beverly Center, the Beverly Grove mall that underwent a $500 million renovation in 2018, “has struggled to find its footing” since, she said.

While two-thirds of LA’s malls are considered among the top-tier, seven are graded B- or below — valuable for their land, but not their retail, making them candidates for redevelopment, according to Green Street.

“The malls that are graded, say B- and below, and the C-quality malls that are within the Los Angeles metro, we would expect those malls to go away within the next decade,” Arft said.

Rising interest rates have hammered malls, making the financial impact between the highest-rated and lowest-rated malls more pronounced. 

“With the higher interest rates, it’s a lot more difficult to find the financing for these big-ticket malls that can be $1 billion or more,” Arft told Bisnow. “Because you can’t find the financing for these specific properties, that dynamic higher interest rate means lower property values in general.” 

In July, Rick Caruso’s upscale Americana at Brand in Glendale scored a five-year, $450 million loan, according to The Real Deal. The interest rate was 7.1 percent, 2 percent higher than the federal funds rate. Its appraised value was $870 million.

Last month, Westfield Century City, a top-tier mall that’s 95.4 percent leased, refinanced for $925 million. The mall was valued by Newmark in May at $1.94 billion, but KBRA valued it at $1.35 billion, based on stressed market conditions. 

— Dana Bartholomew

Read more

Los Angeles

Caruso scores $450M refi on Americana at Brand mall

Los Angeles

Westfield Century City close to securing $925M refinancing

Los Angeles

Harridge buys Baldwin Hills Crenshaw Plaza; eyes $1B overhaul