SPG - Is Pent-Up Demand the Only Reason Malls Are Doing Well Right Now?
Pandemic-hit 2020 was a terrible year for mall real estate investment trusts (REITs), with some actually ending up in bankruptcy court. The niche retail sector has rebounded strongly in 2021 as the economy has reopened after the shutdowns that hit mall REIT results last year. Is pent-up demand among consumers the big story here, or is there something more going on?
Mall landlords like Simon Property Group (NYSE: SPG) , Tanger Factory Outlet Centers (NYSE: SKT) , and Macerich (NYSE: MAC) have seen huge gains so far in 2021 after suffering painful declines in the early days of the pandemic. All three of these REITs have at least doubled the return of the S&P 500 Index and the average REIT, using Vanguard Real Estate ETF as a proxy.
On one hand, that makes sense, given that lockdowns in 2020 likely created pent-up demand among consumers eager to get out and shop. And since more people have been able to head out to the mall in 2021 thanks to increasing vaccination rates, spending at malls has increased.
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Is Pent-Up Demand the Only Reason Malls Are Doing Well Right Now?