Open Air Shopping Centers Breeze Past Malls

Upper Buena Vista in Miami and the Macerich-owned Green Acres Mall in New York (Upper Buena Vista, Macerich)

Upper Buena Vista in Miami and the Macerich-owned Green Acres Mall in New York (Upper Buena Vista, Macerich)

Since reopening in May, Miami’s Upper Buena Vista has seen its foot traffic surpass normal pre-Covid levels, according to the shopping center. And the mixed-use “pocket-village” with 21 stores, 12 of which have opened during the pandemic and five more that are slated to open soon, is now back to almost full occupancy.

The increase in business for the 60,000-square-foot open air mall, which was built around two large centenary trees, is impressive during a regular year, let alone one plagued by retail bankruptcies and store closures.

“We’ve really just adapted the space to whatever is needed by the community,” said Katherin Schultz, Upper Buena Vista’s marketing director.

Outdoor shopping centers, or strip malls, and outlets made up of individual manufacturer stores have been outpacing enclosed malls in their recovery.

Both are in a better position when it comes to the kinds of tenants and customers they attract as people flock to open air spaces while they shop for essential goods like home and office supplies. At the same time, in-store apparel shoppers (a shrinking demographic among consumers) are largely gravitating to bargain deals found in outlets, leaving luxury stores in enclosed malls with even fewer customers.

As a result, shopping center and outlet mall owners like RPT Realty and Tanger Factory Outlet Centers — two of the biggest players with combined market caps of nearly $1 billion — have been reaping much of what’s left of investor interest in retail, according to industry sources.

“In March and April, there was a major sell off across the board,” said Kevin Brown, an equity analyst at Morningstar who covers real estate investment trusts. “Malls took a bigger hit [to their share price], a decline of 60 to 70 percent, whereas shopping centers took a 40 to 50 percent hit.”

The two sectors have seen their overall stock values improve relatively consistently since then, with shopping centers remaining in the lead, according to Brown.

And the shift towards outdoor spaces may be consequential in the coming fourth quarter and beyond — as property owners lay the foundations for upgrades, future acquisitions and ground-up developments.

“Safety is now first and foremost in almost every shopper’s mind,” said Greg Maloney, who oversees JLL’s retail brokerage business in the Americas. “There’s no way I can convince people that you’re going to be safer in an enclosed mall than you are walking down the street.”

“That perception is too strong right now,” he noted.

Winners and losers

RPT Realty, which owns and operates nearly 50 open air shopping centers across the country, had collected 86 percent of its rent from tenants, as of September, while deferrals made up just 7 percent of the total, according to its latest earnings report.

Even in the second quarter, the New York-based company reported that it collected 70 percent of rent — averaging far above mall REITs. Macerich, by comparison, saw its

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