07/03/2014 | By Allen Kenney
D.J. Busch, analyst with Green Street Advisors, joined REIT.com for a video interview during REITWeek 2014: NAREIT’s Investor Forum, held in New York.
Busch, who covers the mall sector, disputed the suggestion that the era of enclosed malls is over. He did acknowledge that a limited number of newly built traditional malls are coming online. However, he also noted that mall market fundamentals remain strong.
The malls that are performing well in the current environment share a number of common characteristics, according to Busch. Higher-end malls are seeing success, he noted.
“Obviously, coming out of the recession, there has been a bifurcation in wealth to an extent,” he said. “What we’ve seen is higher-quality malls that service the high-end consumer have operated and performed quite well.”
Busch said malls that specialize in “non-commoditized products,” which include goods that customers “can touch and feel and try on,” are flourishing. Even the companies with malls that are holding strong right now are dealing with competition from online retailers.
“There’s no doubt that the impact of e-commerce will be a potential headwind in brick-and-mortar retail as we go forward,” Busch said. Consequently, malls are trying to entice consumers by offering “a different, unique customer experience that can’t be replicated online,” according to Busch.