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03/01/2021

Post-pandemic values of malls fall by 60%

Al Urbanski
Real Estate Editor & Manager
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The value of Simon's Crystal Mall in Waterford, Conn., went from $153 million in 2012 to $19 million in 2020.

America’s premier owner and operator of malls, Simon Property Group, marked 13 of its properties as “non-core” in its last earnings report. Just weeks before, it gave its 1.2 million-sq.-ft. Town Center at Cobb back to the bank when no one bid on it at auction.

Last month, the New York Life Insurance Company hired Trademark to remake the 1.3-million-sq.-ft. North Point Mall in Alpharetta, Ga., into a mixed-use center after Brookfield Property handed New York Life back the deed.

A Bloomberg study of reappraisals of retail real estate properties with commercial mortgage-backed securities debt concluded that pandemic lockdowns caused a 60% decline in mall values, and that 118 properties were worth $4 billion less to investors than they were in 2019.

The value of Simon’s 520,000-sq.-ft. Crystal Mall in Waterford, Conn., which Macy’s announced it was leaving in January, dropped 88% from a 2012 valuation of $153 million to $19 million last month.

Other momentous drops were inflicted upon CBL’s Triangle Town Center in Raleigh (from $257 million to $28 million), Town Center at Cobb (from $192 million to $130 million), and Pyramid’s Poughkeepsie Galleria (from $169 million to $69 million).

In his earnings call on Feb. 8, Simon CEO David Simon expressed his company’s outlook that retail real estate values will be re-established when the pandemic recedes and the effervescent rise of e-commerce levels out.

“There'll be some folks that are in our industry that will say, I've got 300 stores, I've got 400 stores, I can do it with 100 and all the growth will come online,” Simon said. “My personal view is I don't think they'll succeed. It's really hard to shrink to grow.”