The current renovation at Fashion Square is adding office space, more restaurants, hospitality, and a hotel and condos. They cut into the retail space to add all that. I shop at Fashion Square a lot and have been watching this project since the beginning. The retail square footage has shrunk. This article sums it up nicely, retail space is shrinking because the retail market is not what it once was. Malls are shifting to uses other than retail space. Scottsdale Fashion Square is a great example. This is absolute fact: leasing retail space is getting harder and harder.
Macerich Brings Wonderspaces to Scottsdale Fashion Square
Zacks Equity Research December 14, 2018
https://www.zacks.com/stock/news/342...fashion-square
The Macerich Company (MAC - Free Report) announced that Wonderspaces will open its first permanent location at the company’s retail and dining hub, Scottsdale Fashion Square.
Particularly, Wonderspaces will lease 16,000 square feet of space to showcase a series of ticketed art shows by associating with global artists. It expects to organize three shows annually at Scottsdale Fashion Square, starting in early 2019.
As this aims to present artwork to new audiences, it will likely drive mall traffic at the retail destination. In fact, Wonderspaces drew more than 60,000 and 100,000 visitors in 2017 and 2018, respectively.
Per Macerich management, Wonderspaces choice for permanent location is an apt fit for both companies. The mall’s strategic location in the affluent area in Arizona will enable Wonderspaces to attract targeted visitors.
Further, it will boost the mall’s tenant roster by adding another first-to-market tenant. The company has been making efforts to rejig the premier shopping and dining destination. In November, the company took the wraps off the luxury wing of Scottsdale Fashion Square, after the hub received a face-lift for more than a year.
The wing is well merchandised with reputed brands, including Dillards, Neiman Marcus, Jimmy Choo, Louis Vuitton and Gucci, making it the ultimate luxury shopping destination.
Admittedly, shrinking mall traffic, store closures and retailer bankruptcies, amid aggressive growth in online sales, have kept retail REITs, including Macerich and others like Kimco Realty Corp. (KIM - Free Report) , Federal Realty Investment Trust (FRT - Free Report) , Taubman Centers, Inc. (TCO - Free Report) , on tenterhooks. In addition, tenants are demanding substantial lease concessions due to a choppy retail real estate market scenario.
This dominance of e-commerce and online retail sales has compelled mall landlords to explore unique uses for their retail spaces. Amid this, Macerich’s efforts to enhance the productivity of malls, by trying to grab attention from new and productive tenants are aimed at boosting mall traffic and driving sales.
Nonetheless, implementation of such measures requires a decent upfront cost and hence, would drag the company’s near-term profit margin.
Macerich currently has a Zacks Rank #3 (Hold). The company’s shares have declined 14.4% in the past six months compared to the industry’s loss of 2.4%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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