When Joe Coradino took the helm of big mall owner PREIT nearly a decade ago, he set a line at an average sales per sq. ft. of at least $500 per center. If a property fell below, it’s future opportunity was evaluated and properties with a weak outlook were disposed. In March of this year, following two years of limited social interaction and month of closed doors a, PREIT’s portfolio-wide sales per sq. ft. average hit $618, a record high for the company. We sat down to talk with Joe about what he sees on the horizon for enclosed shopping centers in the two years ahead.
Every broker tells us that brands are fighting over spaces in good locations. What’s driving the demand?
No question, our leasing team is busier than they’ve ever been. Part of it is there are lots of new tenants wanting to have space in leading malls. There are new domestic retailers, new international retailers, but also more start-ups. One of the positives of COVID was that it drove lots of people to come into the marketplace with new ideas. We’re also seeing more local entrepreneurs wanting to come into a mall environment.
Are PREIT’s super-regional malls in affluent markets picking up tenants that have left malls closing in those areas? Yes, in Harrisburg, where we have our Capital City Mall, there were two other big malls there that are, for the most part, closed. The same thing happened with the Swansea Mall that was near our Dartmouth Mall in Massachusetts. What we have going for us is the markets we’re in. We’re in Philadelphia, which is the 3rd largest life science market in the country, so we were able to bring Cooper University Hospital to our Moorestown Mall and are exploring several other opportunities to bring this use to the portfolio.
Strong retailers are expanding, but they’re having problems with staffing. What’s the answer?
I was in one of our malls a couple of weeks and noticed stores closed and offering limited service due to staffing issues. That just isn’t acceptable and has got to get corrected. We’re holding job fairs and doing what we can to help remedy the situation. But interestingly, this is not stopping solid brands from expanding.
PREIT long ago began installing higher-level restaurants with entrances facing the parking lots. Are you expanding that concept? Yes, we’ve just signed a lease with Eddie V’s at Cherry Hill, a prime seafood restaurant and Blue Fig just opened here as well. We think this leaves us with one of the best mall restaurant lineups in the country. We have Hook & Reel at Mall at Prince George’s and 54 Restaurants at Springfield Town Center. We had our first Shake Shack open at Plymouth Meeting Mall last year and we opened Florence Crab House at Magnolia Mall.
So activity levels are up, but financial pressures are up, as well. Inflation remains an issue and gas prices could have a bad effect on summer travel.
There are certainly a lot of pressures out there, but I am cautiously optimistic. Inflation has tended to help our business as sales are higher. In March, as gas prices rose, physical sales actually rose while online sales declined so we are hopeful that there is still room in pent up demand and that global disruptions subside.