"Mall Rats" On Endangered Species List?

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AP

So you've heard all the pundits/writers/retail investors (including me) talk about traffic declining at malls across the country. While that is widely read as a sign that shoppers are heading to the malls less and shopping less frequently, I had an interesting conversation with an analyst who thinks that might not actually be the case.

A number of investors in mall REITS like Simon Properties and General Growth Properties told me that these publicly traded companies do not share their mall traffic data with tracking services. According to UBS, 75% of malls in the U.S. are owned by public REITS. That's a substantial number of malls left out of the traffic tracking data. Executives at both Simons and GGP have told analysts (and General Growth's CEO told me in my interview with him) that traffic at their malls is strong and NOT in decline.

While we can't compare numbers (that data isn't disclosed) the observations got me thinking. What's different about these malls? What about those reports from the National Retail Federation saying that retailers are cutting back on their number of mall and strip mall locations (44% this year vs. 48% last year)? Do these REITS buck the trend?

Specialty stores say that shopping patterns are changing and consumers are getting choosier about the environments they feel comfortable spending in. But mall owners like Simon Properties and General Growth say that retailers NEED mall space more than they'll admit and are just having a tough time getting it (very few malls being build these days.)

The mall REITS are also benefiting from the department store comeback and expansion nationwide. So, what does this mean for mall REITS & stores? And if you're worried that what's in the mall might not be selling, should you buy the mall itself?

After all, the 'mall culture' has made these shopping complexes big recreation centers for movie watching, restaurant dining, clothing shopping and so they are more than just buy and go transaction locations.

As I digest these reports and think more about the story, I'll blog about it here on retail detail. And what do you think... is the mall rat here to stay? Let me know.

Questions? Comments? retaildetail@cnbc.com