Here’s why open-air strip centers are outperforming enclosed malls

Strip center REITs have performed much better than mall REITs across US

TRD NATIONAL /
Jan.January 14, 2020 03:31 PM
Town & Country Crossing in Town & Country, MO; The Crossroads in Royal Palm Beach, FL; and Mission Bay Plaze in Boca Raton, FL

Town & Country Crossing in Town & Country, MO; The Crossroads in Royal Palm Beach, FL; and Mission Bay Plaze in Boca Raton, FL

While mall landlords have struggled to stay ahead of a challenging retail environment, owners of a less glamorous type of American shopping center have maintained modest growth. And now, even foreign investors are interested.

Real estate investment trusts that own open-air strip centers have seen their share prices rise by 7.7 percent over the past year, the Wall Street Journal reported, citing data from FactSet. While that trails overall stock market growth by a significant margin, it’s still far better than mall REITs, which declined 20.2 percent over the same time span.

The open layout and more mundane tenant mix of strip centers have proven to be an advantage at a time when more specialized retailers are increasingly moving online.

“Retailers want their stores in the line of sight when people are dropping the kids off, or going to the gym,” RPT Realty CEO Brian Harper told the Journal. New York-based RPT owns 48 open-air or grocery-anchored shopping centers across 13 states.

In December, RPT created a $244 million joint venture with GIC — Singapore’s sovereign wealth fund — for a portfolio of five open-air shopping centers in Florida, Missouri and Michigan.

While mall operators generally aim to attract customers who will browse the property’s stores for at least an hour, strip centers — which are generally smaller and more locally-oriented — offer services like groceries, gyms and dentist offices that can keep shoppers coming back on a regular basis. Analysts say this makes them more resistant to competition from e-commerce, as well as to the risk of a recession. [WSJ] — Kevin Sun


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