The 3% increase from the new leases and renewals signed in the second quarter of 2002 is partly the result of space being leased in the REIT's more popular malls, Michaels suggested during a recent earnings conference call. However, the $36.20 per sf achieved on new leases and renewals compares to an average rate of $26.70 per sf on expiring leases in 2003, he added.
Retailers signing those new deals are optimistic on the economy improving in 2004 and 2005, Michaels said, and have not balked at the higher rates. "You're going to see comparable store sales increase, and the retailers are counting on that," he added. "We haven't seen what I would call a real push-back on rents."
Specialty retailers such as Ann Taylor, Williams-Sonoma and Bombay are among the strongest performers in the portfolio, company officials said.
Meanwhile, General Growth Properties expects double-digit returns from two projects that are 60% leased a year ahead of their openings. A 180,000-sf JC Penney store in the REIT's Ala Moana center in Honolulu is being refitted for specialty retailers, Michaels said, and the project is expected to generate on of the best returns of any General Growth Properties has undertaken. Meanwhile, the $200-million Jordan Creek mall in Des Moines, IA, is on time and on budget, Michaels said.
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