Struggling retailers may soon have fewer landlords. Two of the nation’s biggest mall owners — GGP Inc. and Macerich Co. — could feasibly be acquired in the near future.
Over the weekend, $21 billion GGP received a bid, albeit at a slim premium, from its biggest shareholder, Brookfield Asset Management Inc. And Macerich may be pushed into the arms of a suitor if Dan Loeb’s Third Point LLC, which last week disclosed a stake in the $9 billion mall-owner, can successfully agitate for change.
Despite the pain their tenants are enduring as consumers lean on e-commerce alternatives, these landlords are prime consolidation candidates because their portfolios are largely comprised of “Class A” malls, which have the best possible growth prospects and seem most likely to stay relevant.
And yes, e-commerce will no doubt continue to siphon traffic away from brick-and-mortar retailers. But it’s important to remember that the vast majority of shopping still takes place in the physical world.
So while many malls will undoubtedly shut their doors over the next several years, there is still plenty of customer demand for in-store shopping.
And malls are increasingly plugging vacancies with different kinds of businesses, such as fitness centers and kiddie entertainment parks. In theory, even if you’re doing more online shopping, such offerings will entice you to the mall anyway. GGP, for one, is well aware of this shift and has been repositioning itself by scaling back deals with struggling apparel chains and signing up more food and entertainment tenants.