Malls may be poised for a resurgence despite a mixed consumer outlook, driven by improving property performance, according to Altus Group. Renewed momentum in mall transactions could signal an inflection point for the broader retail sector, as investors re-engage with the asset class amid the return of large-dollar deals in 2025. With consumer spending holding up and high-quality supply limited, malls may be setting the tone for a broader retail real estate recovery heading into 2026, the firm said.
The University of Michigan’s Consumer Sentiment Index fell to 53.3 in December, near a record low. At the same time, U.S. Census Bureau data shows retail spending rose 3.9% year-over-year in September to $632 billion, highlighting a disconnect between consumer confidence and spending behavior.
Meanwhile, mall fundamentals have strengthened materially. Occupancy has rebounded to 91%, effectively matching pre-pandemic levels. While near-term lease expirations remain slightly elevated compared with 2019, rollover exposure has been trending lower. Market-to-contract rent spreads are the widest among retail subtypes at 7.5%, reflecting strong re-leasing potential, while appraisal cap rates have stabilized near 6.3% after rising through 2023.
These improving fundamentals have made malls more attractive relative to other retail property types. Many of the weakest centers have already exited the market, leaving a higher-quality pool of assets with more predictable cash flows, according to Altus Group.
Against that backdrop, several nine-figure shopping mall transactions were announced in 2025, and single-asset deal activity remains strong relative to historical norms. A total of 38 malls traded in single-asset transactions during the first three quarters of 2025, matching the full-year total for 2024. At the current pace, more than 50 malls are on track to change hands by year-end, which would mark the third-highest annual total in more than two decades and a 4.9% turnover rate, trailing only 2022 and 2004.
Despite the pickup in mall investment, the broader retail property market has yet to fully recover to its pre-pandemic pace. An average of roughly 11,400 retail properties traded each quarter from 2015 to 2019, compared with 11,039 in Q3 2025. Transaction volume also remains slightly below historical norms, with more than 88 million square feet trading in Q3 2025, about 5.7% below the pre-pandemic quarterly average. Average quarterly retail investment reached $23.1 billion in Q3 2025, only modestly above the 2015–2019 average of $21.3 billion.
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