Regional malls alive and kicking

by Jim Stevens,
SNL Financial

May 8, 2012

The U.S. housing crisis and recession slowed
consumer retail spending capacity. From 2000-2008, median household
income in the U.S. grew to $54,749 from $42,164, but has stalled since
that time. The projection for 2016 now sits at $57,536, according to
ESRI.

Despite
this slowed income growth, regional malls appear well-positioned to
compete against other retailers. These malls are able to draw on a large
and diverse geographic base of consumers by offering unique and luxury
goods. Furthermore, anchor tenants usually sign 15- to 20-year leases,
which provide a strong base for tenant retention. Occupancy of all
domestic regional malls owned by U.S. REITs saw a quick recovery after
the recession, moving to 93.2% by the end of 2011 from 91.0% at the end
of 2009.

However,
all brick-and-mortar retailers face increasing competition from online
retailers. One of online retailers’ biggest advantages is avoiding sales
taxes in most states. Read the complete article

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