Key Points:
- Observed traffic (per Advan) sequentially accelerated in Q2, reflective of more robust aggregate consumer demand, the FIFA World Cup, and a strong box office slate.
- Observed time in the mall (per Advan) was also favorable. More traffic and time shopping have aligned with higher sales per sq foot, higher lease income, and improved occupancy. For example, Simon’s variable lease income increased +28% YoY, and its retailer sales per square foot was $819 for the trailing 12 months ended March 31, 2026, compared to $733 at March 31, 2025, an increase of +11.8%.
- SPG and MAC showed broader breadth in traffic growth across their portfolios relative to BRX and FRT.
Ahead of the retail reporting cycle for FQ2, we looked at the trends / comments from the mall REITs Simon, Brixmor, Federal Realty, and Macerich. (See our takes on grocery-anchored REITS here.) Broadly speaking, Q2 traffic accelerated from Q1’s rate. That also matches retailer trends – see our story consumer going into the 2H - Consumer Spending Heading into the 2H: Swinging higher like Spidey. A strong box office also contributed to June’s strength, with ticket sales rising +29% YoY (Toy Story 5). June’s strength came despite losing 1 weekend day vs. the prior year. July 2026 picked up the day with 10 vs. 9 weekend days, but that gain was somewhat impacted by the 4th landing on Saturday vs. Friday in the prior. Versus Q1, we also believe that the World Cup was a driver (July as well).
Broadly speaking (and not unexpectedly), these managements were positive on the consumer and very positive on demand for their space. Macerich’s CEO said, “Brands are pursuing quality over quantity and competing for limited space in our centers. The Gen Z consumer over-indexes on visiting physical stores, and spending on goods, food, and experiences and is on track to become the largest spending demographic in the country. Those tailwinds are only getting stronger… At Crabtree, our leasing momentum has been strong. We recently announced Level 99 and Fogo de Chao, and Dick's House of Sport is opening in September. In addition, Lululemon has recently signed a lease to extend and expand their location.”
As implied by Macerich’s outperformance in 1H traffic and hours-visited (+4.2%), its occupancy trend also outperformed. Brixmor’s occupancy decline is a bit of an anomaly with CEO Brian Finnegan saying, “Total leased occupancy ended the quarter at 94.8%, down 30 basis points sequentially as expected due to proactive move-outs at redevelopment assets and the recaptures from Painted Tree and Wren Kitchens. Importantly, we are already at lease on 6 of the 8 recaptured Wren and Painted Tree boxes at spreads of over 40%. In addition, the record small shop occupancy level we achieved this quarter is a clear reflection of the improved quality of the portfolio and the follow-on demand created by our reinvestment activity.” i.e. we expect Q3 occupancy to increase QoQ. In the case of Simon and occupancy, it’s kind of maxed out at 96.0%; by contrast, Federal has more headroom at 93.8%.
On the earnings call Eli Simon said, “Shopper traffic accelerated in the quarter, and retailer sales volume again grew solidly YoY, further evidence that our portfolio is well positioned and our properties are the places where shoppers and tenants want to be… Total sales volume increased 6.6% over the trailing 12 months and 7.6% in the quarter, with comparable sales growth of 5.7% for the second quarter… Luxury remains very strong on the full price side for sure... the jewelry side, the watch side, that remains very, very strong, continues to grow. [Restaurants were weaker and that’s macro.]” As shown in the prior table, at +3.5%, Simon had solid growth in hours shopping (average dwell time x visits). Using our Claude.ai+Advan MCP, we observe that 79% of Simon’s malls grew traffic in Q2, indicating that the traffic growth had good breadth. By contrast, Brixmor and Federal have more “headroom.”
