Are Class-A Malls a Top Investment Opportunity?

Investors may be missing a big opportunity in class-A malls. Top quality malls are outperforming other retail assets and are seeing strong rent growth. CBRE Global Investors sees strong potential in these assets, and recently struck on the opportunity with the acquisition of three-property portfolio totaling 3.7 million square feet located in Atlanta, Dallas/Fort Worth and Minneapolis. CBRE purchased the portfolio in a joint venture with Brookfield Property Partners from General Growth Properties.

“In contrast to lower-quality properties which are experiencing major headwinds, class-A malls continue to outpace other retail formats and are experiencing rising sales and rents,” David Morrison, the CIO of the Americas at CBRE Global Investors, tells GlobeSt.com. “We expect to see a widening gap in performance in malls and incremental shopping demand from the consumer to be driven into class-A malls to accelerate as the shopper experience in lower-quality assets is increasingly challenged.”

CBRE Global Investors purchased Cumberland Mall, a 1 million-square-foot super-regional mall in northwest Atlanta; Ridgedale Center, a 1.2 million-square-foot super-regional mall in western Minneapolis; The Parks Mall at Arlington, a 1.5 million-square-foot super-regional mall between Dallas and Fort Worth. The assets are 98% leased and all fit CBRE’s profile for future growth. “These assets and locations ranked very highly in that process based on the strong local economies and real estate fundamentals,” says Morrison. “Additionally, we felt that these assets had a strong balance of attractive and stable tenant profile while still providing upside opportunities to enhance the assets and increase rents and value overtime.”