Consumers remain largely confident about their personal situations, despite a host of broader economic and geopolitical concerns, says Tom O’Hern, CEO of Macerich (NYSE: MAC). That sentiment is fueling sales and leasing volumes across the REIT’s portfolio of retail and mixed-use real estate.
“The resiliency of the American consumer is amazing, and it is once again on display. Shoppers have come roaring back to our centers to shop with a purpose,” O’Hern told the REIT Report.
During the first quarter, sales were 111% of what they were pre-COVID.
“Despite the economic uncertainty regarding inflation that we haven't frankly seen in decades, higher mortgage rates, a very volatile stock market, and the war in Ukraine, American consumers remain largely confident about their own situations,” O’Hern said.
Retailers, meanwhile, are reacting to those positive trends. “There’s robust and accelerating demand for space in virtually all categories,” O’Hern said.
Leasing volumes and deal flow in Macerich’s portfolio were up significantly during the first quarter. For example, the REIT signed 220 leases—a 22% increase over the first quarter of 2021, which was itself a fairly strong leasing quarter. “These are volumes that we have not seen since 2015,” O’Hern said.
Elsewhere in the interview O’Hern noted that:
- Macerich’s town centers bring together a powerful mix of uses. “Today the consumer has a much greater appreciation for the physical setting than they ever did before.”
- Digitally-native brands, still a relatively small percentage of total business, continue to seek more brick-and-mortar locations.
- Retailers today have survived COVID. “They have strengthened balance sheets, they're financially in a much better position to expand and have new store openings.”
- Macerich is ramping up development again and expects to spend about $100 million this year and probably about $150 million next year. The REIT continues to secure entitlements and plan transformative projects.
- Office will be a bigger part of the Macerich portfolio, but won’t exist at every property.