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Simon’s second coming?

The 'death' of the anchor tenant breathes life into mall giant amid changing market
By Katherine Clarke | May 13, 2016 09:45AM

David Simon, chairman and CEO of Simon Property Group, the nation’s largest mall owner.

From the National Market ReportWhen Saks Fifth Avenue, one of the great old American department stores, shuttered its location at the Shops at Riverside in Hackensack in 2014, the closure left a major hole in the fabric of the New Jersey property.

The Saks branch had been the centerpiece of the mall since its 1977 debut to great fanfare as an anchor tenant. For many years the store was a major draw for New Jersey shoppers who wished for a taste of Manhattan glamour at their doorsteps. In the years following the financial crisis, Saks’ glory days were gone; sales lagged and the store was besieged by competition from rivals such as Bloomingdale’s and Neiman Marcus.

The closing also had the potential to cause a big problem for the mall’s owner: Retail behemoth Simon Property Group — the largest mall operator in the U.S. — was suddenly faced with 100,000 square feet of vacant property.

This is an issue that Simon Property Group (SPG) and its competitors have faced over and over, as traditional anchor tenants that inked deals decades ago struggle to keep sales speeding along in a drastically altered retail landscape.

But it’s now clear that the slow, painful death of the anchor tenant has served as the kiss of life for some of the country’s largest mall owners — and SPG in particular. [more]