The people that we’ve been talking to, their inventories are down anywhere from 15% to 22% from last year. So while that is not going to drive top line sales, they are much more optimistic because they have less inventory they have to push out the door, they’re going to be able to be much more disciplined on their pricing and drive a lot more margin improvement and most importantly, cash flow.
......based on talking to the retailers, which David and I are doing a whole lot of everyday that they’re feeling better and we have absolutely seen several instances of retailers that were in here in the second quarter asking for rent relief and modifications and then came back in the third quarter and said, “Looks like, we’re okay.” We don’t need anything. We’re going to make it.
“as I read all of the retail analysts and all of their ratings and their movements virtually all of the retailers are getting upgrades and more positive outlooks based on the expectation that there’s going to be a more profitable Christmas, which may or may not be related to more sales.”
Retailers have started to gain their footing and certain retailers are growing store counts including Aeropostale, Gachi, Apple, the Buckle, California Pizza Kitchen, Fresh, Forever 21, H&M, Michael Kors and Red Robin, to name a few. In a number of predominantly outlet ,tenants are also increasing their store counts. We have a significant amount of leasing volume in our pipeline over 500 deals and 8 million square feet of leases in process across all of our domestic platforms.
In particular, it is good to note the volume of big box activity has significantly increased in the second half of the year. Since mid July we have completed 20 big box deals across the four platforms and discussions are underway on 20 to 30 more retailers will include Forever 21, H&M Dave & Buster’s, Bed Bath & Beyond. We are seeing a slight quality of the big box retailers they want to be in malls, outlets, mills or strip centers where they benefit from shopper quality and traffic.
Preliminary reports from retailers regarding October have been encouraging. We believe our retailers will have a decent holiday season.
Sales Per Square Foot
Occupancy in all of the four platforms was up sequentially from 6/30/09, Mills was up a 150 basis points and Regional Mall and Premium Outlet Centers increased 50 basis point and Community, Center, Lifestyle platforms increased 40 basis points.
Regional Mall retail sales in the third quarter were $430. The decline in sales for September over September was much lower than any month year-to-date. Mall leasing spreads were $4.04 for the first nine months of 2009, average base rent was at 9/30/09 was $40.05, up 2% for the year earlier period.
Premium Outlet comparable sales were relatively stable in the third quarter at $492 per square foot, down only $1 from 6/30/09, and actually were up in September on a comparable sales per square foot. Premium outlet releasing spread continues to be strong at $9.25 per square foot for the first nine months of ‘09. Average base rent for the outlets at 9/30/09 was $32.95 per square foot up from the year earlier period.
SPG's remark on retailers was consistent with most of the "stabilizing" and "getting better" pictures. However, the multi-billion question at this stage is: How much better?