There was a period when Santa Monica-based mall owner Macerich was plodding along to inch from one quarterly target to the next.
It was short sighted and exacerbated by a high debt load, leading to Macerich losing its way at several properties. Things have changed over the course of a year.
“For a long time, I would say if I were a student of what happened in our portfolio, not a lot of offensive capital went in,” CEO Jack Hsieh told analysts on Tuesday during the Bank of America Securities 2025 Global Real Estate Conference. “So, we got picked off by power centers [and] lifestyle centers.”
Since Hsieh’s arrival in March 2024, Macerich has aggressively unloaded underperforming malls. It’s swiftly categorized its properties into easy-to-understand buckets: Fortress, Steady Eddy and Eddy malls. The Eddies are most likely to be sold, while the Fortress properties are outperforming flagships.
While previous strategies led to Macerich properties being exposed to competitors, things are shifting, Hsieh suggested.
To be clear, there’s still work to be done. Macerich has about $500 million to $600 million more in malls to sell off over the next one to two years. Once completed, those deals of outparcels, free-standing retail and land will bring the total to $1.4 billion to $1.5 billion in assets sold. It also needs to fill anchor spaces left behind by tenants such as Forever 21 that only dragged down the wings they operated in.
“There will be a time of reckoning when I’m going to be able to go back, when I’m fully leased and be much more offensive as it relates to pulling tenants out of lifestyle centers around us,” Hsieh said.
More Mall Deals
In the capital markets, financing is starting to loosen up on B malls doing around $400 to $600 per square foot in sales, according to the CEO.
Although Macerich is trying to pay down debt and sell off underperforming malls, it’s not shying away from purchases.
In June, it said it was paying $290 million for the Crabtree Mall in Raleigh, North Carolina. The 1.3 million-square-foot mall’s purchase was funded through a combination of cash and $100 million in debt.
Macerich was one of several suitors looking to snap up the property, with Hsieh saying a “number of private entities” were vying to buy Crabtree.
He viewed the activity as a sign of more malls, whether in special servicing or controlled by lenders, now being offered for sale.
“I would say that the market is getting more functional as opposed to dysfunctional because of financing, equity sources there and now it’s just a question of the product, the total addressable market,” he said. “And I think you will probably start to see more [malls] come on the market in the coming months.”
New is Old
Turns in the capital markets are one thing of note, but shifts in leasing activity are also happening for Macerich.
Forever 21 unloaded about 570,000 square feet on the company’s properties. About 67 percent of that is now leased and 18 percent have letters of intent signed. Macerich also expects to see at least two times the rent Forever 21 was paying from the replacement tenants.
Names such as Zara, Dick’s House of Sport, Uniqlo or a flagship Foot Locker have been floated in the context of filling that space.
Macerich is also benefiting from a revival of a number of tired mall brands, while also enjoying the trajectory of emerging businesses.
“I think very intriguing is we always talk about some of these sexy, emerging brands, whether it’s Alo Yoga or Faherty or Brandy Melville, and they’re great,” Macerich Senior Executive Vice President of Leasing Doug Healey said at the Bank of America conference. “But we’re starting to see some of these legacy brands really reinvent themselves.”
Pacific Sunwear has for a while now been enjoying a revival with a trend-right assortment and focus on exclusives. More recently, Abercrombie & Fitch and Hollister have also made significant improvements to their assortments, leading to more attention from consumers. There’s also Gap Inc.’s portfolio, with its two largest brands leading the way.
“…Gap, Old Navy, they’ve been irrelevant for a long time,” Healey said. “They are extremely relevant right now…. So, while we continue to reach out and accommodate these emerging brands, [it’s] really good to see the legacy brands, who are staples in our properties, reinventing themselves and performing very, very well.”
Gen Z and Spending
Despite headlines offering grim outlooks, the gloom hasn’t trickled over to Macerich’s malls, executives said.
“There’s definitely a lot of things going on between politically, the tariffs and other things in the macroeconomic environment,” Healey said. “But, so far, and I think I’ve said this on several [earnings] calls … we’ve seen no correlation with retailer demand.”
In fact, Hsieh said the portfolio’s traffic was up in the first six months of the year versus the year-ago period.
“And it’s only going to increase with these 30 anchor stores and all of these flagship locations that are being built,” Hsieh said, pointing to future openings of Din Tai Fung, Eataly and Dick’s House of Sport.
The CEO added the company is thinking about Gen Z and what those shoppers want. The segment is the fastest growing in terms of foot traffic into Macerich properties and is spending.
“That’s a big pot of money. They go to malls. What do they want?” Hsieh said. “I can tell you, we’re trying to figure it out. They want certain tenancy. But, as a landlord, what do we need to do today? What do we need to do five years from now, 10 years from now because that is going to be the largest segment spending population… in our centers.”
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