Retail REITs Expected to Underperform in 2001

NEW YORK CITY-The recent announcement by clothing retailer Gap that it may slow the opening of new stores in 2002 and 2003 may indicate that the lively leasing environment of the last three years may be coming to a close. Growth in square footage is now estimated by the company to rise approximately 15% next year and the year after, compared to the 17% to 21% rate this year and a 31% upswing in 2000.

This slowdown in leasing activity, together with an announcement that clothing retailer The Limited is looking to sell its women’s clothing retailer Lane Bryant, has led Lehman Brothers analysts to strengthen their belief that regional mall REITs will underperform commercial and apartments REITs through 2001.