Americans are passionate about shopping and the latest data makes it clear that they are embracing the online model in record numbers.
Can malls survive the onslaught in online shopping? The opportunity to eat at your desk and shop simultaneously?
A worn expression on Wall Street is that the "trend is your friend" and this trend is slapping you in the face. Numbers from comScore this week show a record online shopping binge this holiday season of $32.6 billion dollars.
Note that as online sales have taken off over the past decade, mall vacancy rates have also been creeping higher.
The question now is: as the recession recedes, will vacancy rates fall or, are malls a relic of an earlier age?
Ryan Severino, Reis economist notes that competition for shoppers has diversified with popularity of community centers and smaller venues on the rise. “The one thing that malls have going for them is that there is a finite supply of them”, he said. With land expensive and barriers to entry high, mall operators have a commodity that is in short supply—including Simon Property Group, Macerich, General Growth Properties and Taubman Centers were solid performers last year, racking up double digit gains or better. The consensus of analysts rate SPG and MAC a "buy", GGP and TCO a "hold".
Companies mentioned in this post
Simon Property Group
General Growth Properties
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