Leasing momentum continues
Across the portfolio, leasing momentum continued: “We signed more than 1,200 leases for more than 5.9 million square feet in the quarter,” Simon said. “We have an additional 1,500 deals in our pipeline, including renewals for approximately $570 million in gross occupancy cost. More than 25% of our leasing activity in the first quarter was new deal volume.”
Simon ticked off other positive growth areas: “We’re seeing strong broad-based demand from the retail community, including continued strength for many categories,” he said. “By the end of the second quarter, we expect to be approximately 75% complete with our 2023 expiration. Retail sales momentum continued. Reported retail sales per square foot reached another record in the first quarter at $759 per square foot for malls and premium outlets combined, an increase of 3.3%.”
Indeed, records were set: “All platforms achieved record sales level, including the mills at $683 a foot, a 2.2%, and TRG was $1,100 per square foot, a 6% increase,” he said. “Good news is, tourism is returning with our tourist-oriented centers outperforming the portfolio average in terms of sales. Our occupancy cost at the end of the first quarter was 12%. We opened our West Paris Designer Outlet in Normandy, France last week, our 35th international outlet center.”
While inflation continues to fall as the Fed hikes the interest rate, it may loom large this year – with negative effects on the retail industry. “Almost all retail executives expect inflation to pressure their profit margins,” researchers at Deloitte wrote in a recent report. “They’re also predicting hard times for consumers, with nearly all anticipating diminished consumption in 2023, resulting from rising financial concerns.”
And yet, the outlook is not all gloom-and-doom, researchers wrote. “Retailers have learned much about resiliency in the past few years,” the study’s authors said. “Massive demand fluctuations during the pandemic forced retailers to rethink archaic systems in favor of more pliable operations. They learned that rapidly evolving consumer preferences require more effective analytics and tools to build loyalty.”
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