Outlet Centers Are Seeing Higher Foot Traffic Than Malls

Foot traffic at malls and outlet centers is approaching pre-pandemic levels, although recovery appears to be faster at outlet centers.

That’s according to a new report from S&P Global Market Intelligence, which analyzed data from AirSage. The Atlanta telecommunications company collects and analyzes real-time mobile signals, GPS and other location data to track movement patterns.

Foot traffic at US malls and outlet centers that were part of the AirSage analysis has steadily climbed since May, the S&P report said.

The AirSage analysis included properties owned by Simon Property Group Inc., Taubman Centers Inc., Macerich Co., Tanger Factory Outlet Centers Inc., Brookfield Property REIT Inc., Washington Prime Group Inc., Pennsylvania REIT and CBL & Associates Properties Inc.

The AirSage data shows foot traffic to US malls owned by publicly traded real estate investment trusts was still down about 15% year-over-year for the week ended Aug. 9, according to the S&P report. But foot traffic at outlet centers was slightly higher than 2019 levels.

“Among the analyzed REITs, Tanger’s portfolio experienced the quickest recovery in foot traffic, likely due to the open-air nature of its outlet centers,” the S&P report said, noting that stores at Tanger’s outlet centers reopened throughout the second quarter as states lifted closure mandates. As of July-end, 95% of Tanger’s total occupied stores had reopened, the report said.

Tanger CEO Steven Tanger has said the reopening prompted enthusiastic shoppers. “Basically, when the mandates were lifted, people were excited to get out of their houses and go to shop,” he said during REIT’s second-quarter earnings call, according to the S&P report.

Reflecting the trend, Simon Property Group’s outlet centers showed a quicker recovery than its enclosed mall properties, the S&P report said.

“I do think the consumer generally feels a little more comfortable in the outdoor environment,” chairman and CEO David Simon was quoted as saying during a company earnings call. He added, however, that increased foot traffic was also correlated with a lower prevalence of COVID-19 cases in a given location, the S&P report said.

According to the AirSage data, foot traffic at properties owned by Taubman Centers and Macerich has rebounded the slowest, down roughly 25% year-over-year in the week ending Aug. 9.

While some shopping areas are seeing a resurgence in traffic, the pandemic could deal the final blow to some struggling regional malls, in which borrowers are preparing to turn over properties to lenders. For instance, the loan on Simon Property Group-owned Montgomery Mall in North Wales, Penn. transferred to special servicing in July, according to a report by DBRS Morningstar.