Simon REIT: Mall Leasing Activity is Strong
Largest mall owner inked 4M SF of leases in Q2, with big rebounds at its properties in Florida and Las Vegas.
Simon Property Group reported strong leasing activity in its malls in the second quarter and said 40% of its deals were made with new businesses that are lining up to fill mall space at its properties.
The REIT, which is the nation’s largest mall owner, had record retailer sales of $746 per square feet at its malls and outlets combined in Q2, a 26% increase from last year, with malls alone notching a 29% increase to $674.
The company reported an occupancy rate of 93.9% as of June 30, up from 91.8% a year ago. Its average base rent increased for the third consecutive quarter, to $54.58.
“Leasing momentum accelerated across our portfolio,” said David Simon, president and CEO of Simon Property Group, during a Q2 earnings call on Monday.
“We signed nearly 1,300 leases for more than 4 million square feet and the quarter, and [we] have signed over 2,200 leases for more than 7 million square feet through the first half the year,” Simon said.
“Nearly 40% of our total leasing activity in the first six months of the year has been new deal volume, and we have a significant number of leases in our pipeline,” Simon added.
Simon said the leading mall REIT has seen a big rebound in its properties in Florida and Las Vegas. “Florida is on fire,” he said.
Despite warning signs that the US may be slipping into a recession, the REIT CEO said the company is not seeing indications that its solid leasing activity will hiccup anytime soon.
“Even with what’s going on in the world, we really haven’t seen anyone back out of deals of note at all,” Simon said.
According to Simon, higher-income consumers are still spending money, while those who shop at value-oriented retailers are reining in spending.
“The higher-income consumers are in good shape [and] brick and mortar stores are where shoppers want to be, outpacing e-commerce across the world and the broad retail spectrum,” Simon said. “Demand for our space is extremely strong.”
The REIT said it completed refinancing 14 of its property mortgages during H1 2022 for a total of $1.6B at an average interest rate of 3.75%.
According to data from Coresight Research, retail store openings in the US have been more than double the closures thus far in 2022, with 4,432 openings and 1,954 closings.