Do you have time to stroll around the mall, or are you more inclined to run into the local store, get what you need, and move on to your next errand? Strip malls are evolving to offer the customer more “convenience” and now they are outperforming enclosed malls.
While mall landlords have struggled to stay ahead of a challenging retail environment, owners of a less glamorous type of American shopping center have maintained modest growth. And now, even foreign investors are interested.
Real estate investment trusts that own open-air strip centers have seen their share prices rise by 7.7 percent over the past year. While that trails overall stock market growth by a significant margin, it’s still far better than mall REITs, which declined 20.2 percent over the same time span.
The open layout and more mundane tenant mix of strip centers have proven to be an advantage at a time when more specialized retailers are increasingly moving online.
“Retailers want their stores in the line of sight when people are dropping the kids off, or going to the gym,” says RPT Realty CEO Brian Harper. New York-based RPT owns 48 open-air or grocery-anchored shopping centers across 13 states.
In December, RPT created a $244 million joint venture with GIC - Singapore’s sovereign wealth fund - for a portfolio of five open-air shopping centers in Florida, Missouri and Michigan.
While mall operators generally aim to attract customers who will browse the property’s stores for at least an hour, strip centers offer services like groceries, gyms and dentist offices that can keep shoppers coming back on a regular basis.
Analysts say this makes them more resistant to competition from e-commerce, as well as to the risk of a recession.