For all the gimmicks embedded in discussions of retail’s future, the go forward isn’t that deep. Macerich seems to have cracked that code.
The Santa Monica-based mall owner is placing big bets on malls that, from the outside, may seem less than spectacular. They don’t rely on being in primary markets, such as Los Angeles, or buzzy high streets like Rodeo or Beverly drives, where the competition is fierce.
Instead, Macerich, under CEO Jack Hsieh has gone back to basics, pumping Macerich’s future in malls with little competition in the immediate trade area and making the appeal to broad demographics: teens wanting a place to hang out with friends, families spending time together, fashionistas looking to stay on trend or a shopper looking to run in and out of a store with basics.
With the company in mid-turnaround, it’s still working through the sale of underperforming properties and the focus with the go-forward properties all comes down to the right tenants.
“This all begins and ends with leasing,” CEO Jack Hsieh told analysts last week. “Leasing is the piece of the plan that best tracks the progress on hitting our 2028 targets.”
That target is 4 million square feet in lease deals this year and another 4 million next year. So far, it’s exceeded the target for this year with Celine, Chanel, Loro Piana, Mendocino Farms, Rivian, Princess Polly, Loewe and Wilson all new tenants to Macerich properties.
Drilling down a bit deeper, here’s a look at the local malls Macerich will rely on for its go-forward path.
Los Cerritos Center
Location: Cerritos, Calif.
Hsieh called Los Cerritos Center Macerich’s “most important asset” in Southern California, and for good reason.
“That mall is doing gangbusters right now. Lots of traffic, lots of sales, lots of tenant demand,” he said.
The company’s now looking to fill up the former Sears building and old Forever 21.
At over 1 million square feet, the mall is right off Interstate 605 and counts 1.7 million people in the total trade area. About 43 percent of those within that radius have median household incomes of $124,000, according to Macerich data.
The 1971-built mall was last renovated in 2015 and is anchored by Macy’s, Nordstrom, Zara and Dick’s Sporting Goods. It’s big on restaurants with Lazy Dog Restaurant & Bar, The Cheesecake Factory, North Italia and P.F. Chang’s.
The next closest competitor would be the Stonewood Center in Downey, which is about six miles north and smaller with Kohl’s, JCPenney and Macy’s anchoring the property. There’s also, about three miles to the east, the Lakewood Center mall, which Macerich just sold.
Other Macerich Fortress Properties
Los Cerritos Center is Macerich’s only Fortress property in California, while Broadway Plaza in Walnut Creek has been categorized as having Fortress potential. These are the directional, top-performing centers that define Macerich’s future and will lead the turnaround.
Others in the same Fortress category within Macerich’s portfolio, include Green Acres Mall in New York, Queens Center in New York, Scottsdale Fashion Square in Arizona, Tysons Corner Center in Virginia and the latest acquisition in North Carolina’s Crabtree.
Mall of Victor Valley
Location: Victorville, Calif.
Macerich’s Mall of Victor Valley owns the High Desert. As malls go, it’s the only game in town running along Interstate 15. The next closest mall to the north of it would be the Barstow Outlets, which is about 30 minutes away. To the south, would be the Inland Center in San Bernardino, about a 40-minute drive away. Macerich owns the Inland Center, too, by the way.
The company counts 456,000 shoppers in the Victorville mall’s trade area with 186,000 within a five-mile radius.
The Mall of Victor Valley defines the traditional ‘80s-style shopping center. Built in 1986, it was last renovated in 2012.
Anchoring the 577,000-square-foot property are JCPenney, Dick’s Sporting Goods, Macy’s, Barnes & Noble and Cinemark.
Other retailers comprising the rest of the center include Vans, Hollister, Victoria’s Secret, Claire’s, Bath & Body Works, Famous Footwear, Cotton On and JD sports. Round1 is the latest least signing for the mall.
Average household income in the main trade area is about $91,000, according to Macerich. The mall operator’s also banking on the region’s future growth, which is projected to be about 21 percent by 2030. There’s also the long-talked about high-speed rail project’s economic impact ($12 billion during the construction phase of the Palmdale to Victorville link).
Other Macerich Steady Eddy Malls
Macerich categorizes the Mall of Victor Valley in its Steady Eddy category. This means it generates cash and is stable, but not like the Fortress high performers.
In the latest quarterly update for the company, Hsieh repeatedly described these California Steady Eddy malls’ performance as “doing quite well” or “doing well.”
Among its other California properties in that Steady Eddy bucket are the Village at Corte Madera in Corte Madera, Stonewood Center in Downey, Inland Center in San Bernardino and Vintage Faire Mall in Modesto.
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