The biggest shopping mall owners in the United States say retailers are still forging ahead with plans to open new stores in spite of growing recession fears and decades-high inflation that’s squeezing shoppers’ budgets.
Simon Property Group, the country’s largest mall owner, said the pipeline of businesses slated to open up at its properties remains strong. The company reported an occupancy rate at its U.S. malls and outlet centers of 93.9% as of June 30, up from 91.8% a year earlier.
“Even with with what’s going on in the world, we really haven’t seen anyone back out of deals,” Simon Property Chief Executive Officer David Simon said on an earnings conference call Monday.
“We’re seeing a big rebound in Vegas, Florida is on fire … California is finding its legs,” he added.
Fueling the openings are a mix of factors, including retailers pushing to snap up limited space and popular online brands looking to expand by opening up brick-and-mortar locations. Some retailers are eyeing real estate in markets outside of major cities as they follow people who uprooted to find bigger spaces during the pandemic. And companies including Macy’s that shuttered stores in recent years are now testing different formats, often with smaller footprints.
So far this year, retailers in the U.S. have announced 4,432 store openings, compared with 1,954 closings, according to data from Coresight Research, resulting in a net of 2,478 openings.
Before the pandemic, the industry was seeing net closures of thousands of stores every year as consumers increasingly moved their spending online. In 2019, Coresight tracked 9,832 closures, compared with 4,689 openings. Last year, the retail industry eked out a net addition of 68 stores.
The optimism from retail real estate owners comes amid warning signs from across the industry. In recent weeks, retailers including Walmart, Target, Best Buy, Gap and Adidas slashed their sales or profit outlooks as consumers squeezed by higher gas and grocery bills reign in spending on other items. At the same time, though, luxury retailers including Birkin bag maker Hermes and Louis Vuitton parent LVMH say profits are strong and sales are growing as higher-income consumers continue to splurge on pricey fashion and accessories.
At its malls, Simon Property also said it’s noticing a split in behavior. Consumers who shop at value-oriented retailers are more likely to be pulling back, Simon said, as are younger shoppers who don’t earn as much money. Among those seeing softening sales are the company’s teen and fast-fashion retailers Aeropostale and Forever 21, as well as its J.C. Penney department store chain, he said.
But he said businesses like men’s suit retailer Brooks Brothers, which Simon Property also owns, continues to ring up sales.
“The higher-income consumer is still spending money,” Simon said.
Macerich, which operates malls including Tysons Corner Center in Virginia and Scottsdale Fashion Square in Arizona, noted that distress in the retail…
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