Retail apocalypse debunked by mall developer
With occupancy, rent and sales per square foot at, or near, all time highs, retail developer Taubman Centers’ results show that reports of the death of physical retail are overblown.
Taubman owns, operates and leases 27 regional, super-regional and outlet shopping centers in the U.S. and Asia and by almost every metric its properties are performing at peak levels. Comparable tenant sales per square foot increased 3.2% during the fourth quarter and increased 2.3% to $810 during the fiscal year ended Dec. 31, 2017.
“This marked our sixth consecutive quarter of positive sales growth, and holiday sales were especially encouraging,” said Robert S. Taubman, Chairman, President and CEO of Taubman Centers. “As the retail environment continues to stabilize, we’re seeing very good demand for space in our centers. Occupancy, rent, and sales are all at, or near, all-time highs.”
The company’s centers are 96% occupied and tenants occupying the space are paid slightly higher rents on an average of slightly more than $61 a foot in comparable centers.
“Notwithstanding a very challenging retail environment, we saw growth in nearly all our key metrics in 2017,” Taubman said. “Adjusted FFO (funds from operations), sales, occupancy and average rent were up, and total NOI (net operating income) increased over 10 percent, primarily due to the growth of our newest assets in the U.S. and Asia. We continue to execute on our promise to deliver growth and value to shareholders.”
Taubman’s experience is somewhat unique and there have been plenty of retail store closings, especially at weaker retail properties in less desirable locations. As Taubman notes, its U.S.-owned properties are the most productive in the publicly held U.S. regional mall industry.