Class A Malls Defy Retail Gloom With Luxury-Fueled Comeback

The American mall isn’t dead. It’s split in two.

A small slice of high-end shopping centers is outperforming expectations, drawing shoppers, tenants and capital even as most malls continue their long slide, the New York Times reported. The divide is turning what was once a troubled asset class into a sharply bifurcated bet for real estate investors.

Class A malls — typically dominant, luxury-leaning properties in affluent areas — are posting strong occupancy and rent growth. At Roosevelt Field on Long Island, owned by Simon Property Group, occupancy tops 96 percent with tenants like Hermès, Rolex and Armani driving sales of roughly $1,250 per square foot.

That performance is increasingly rare. Roughly 900 malls remain across the country, but the top 100 account for about half the sector’s value, while the bottom 350 make up just 10 percent, according to Green Street. Revenue at top-tier malls is growing about 5 percent annually, while lower-tier Class B and C properties are shrinking at a similar pace.

The result is a K-shaped recovery that mirrors broader real estate trends: capital and tenants are concentrating in the best assets while everything else struggles to stay afloat.

Operators are leaning into the shift. Firms like Simon and Brookfield’s mall arm, GGP, have retooled properties to emphasize luxury retail, dining and experiential tenants, moving away from the old anchor-driven model.

GGP’s portfolio is about 95 percent occupied with tenant sales up nearly 20 percent since 2019. Some trophy assets have seen sales per square foot jump as much as 60 percent.

Financing is following performance. Issuance of commercial mortgage-backed securities tied to top malls doubled to $8 billion last year, signaling lender confidence in the segment.

Meanwhile, weaker malls face a grim outlook. About 40 close each year and more than 11 percent of loans tied to regional malls are delinquent, according to Trepp. Distressed properties, often saddled with debt and vacant anchor boxes, are trading at steep discounts or heading toward foreclosure.

The split is also being driven by consumer behavior. Younger shoppers are returning to in-person retail, particularly in curated, experience-heavy environments. Landlords are capitalizing by adding entertainment concepts and even attractions like Netflix-backed experiential venues.

— Holden Walter-Warner