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Detailed Report: 2Q 2017 Mall REIT Foot Traffic

Download full report here (PDF, 20 pages)

Mall REITs Face Declining Foot Traffic

During the earnings reporting cycle for the first quarter of 2017 (“1Q17”), for our clients in advance of scheduled quarterly earnings releases, we accurately predicted negative year-over-year (“YoY”) foot traffic trends at mall anchor stores, including Macy’s, Nordstrom, Dillard’s, and Sears.

To quantify our accuracy level by looking at actual results, the YoY growth in same-store transactions or same-store sales reported by mall anchors matched our predictions based on foot traffic to within 0.7% on average in 1Q17.

Unlike the anchor stores located on mall REIT properties however, most REITs themselves do not have a means of counting the people who visit every individual mall they own. Instead, such REITs use people counters for a sample of malls as an indication of performance for their malls nationwide. In at least one case, a REIT appeared to use a sample of one mall to answer questions about foot traffic trends across all properties.

During the 1Q17 earnings reporting cycle, in stark contrast to the mall anchor stores located on their properties, many mall REITs reported or suggested that YoY growth in foot traffic across their mall properties was positive.

Our data does not support such conclusions.

Key Conclusions

  • Most REITs operating malls classified as high quality Class A have negative YoY foot traffic on a rolling quarterly basis through May 2017:
    • Simon Property Group (SPG):         -5.4%
    • General Growth Partners (GGP):     -5.7%
    • Taubman Centers (TCO):                  -6.2%
  • High-tech stores such as Apple, Microsoft, and Tesla have no effect in preventing declining traffic.
  • Malls with destination restaurants such as Cheesecake Factory and P.F. Chang’s underperform by 3.5%.
  • Malls with high-end department store anchors such as Nordstrom and Macy’s underperform by 3%.
  • Malls and strip centers with grocery stores and consumer staples outperform by 5%.


Posted July 26, 2017