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In Spending Spree, European Mall Operator Bets on Westfield

December 13,2017 03:17

For Unibail-Rodamco, which is based in France and has a bevy of glitzy shopping centers across Europe, including Le Forum Des Halles in Paris, the deal means a significant foothold in the United States — one defined by a number of trophy mall ...and more »

But their counterparts in the United States have struggled. That’s due, in part, to the fact that retail real estate expanded at a much more rapid clip in the United States than it did in Europe, so the pullback has been much sharper.
In the United States, there appears to be two bets emerging on the future of malls, analysts said.
Higher-end malls — those that are in wealthier suburbs and have attracted a blend of luxury retailers with gyms, organic grocery stores, and even urgent-care centers — will survive or even thrive. Lower-end malls located in less-prosperous locations will continue to see stores shutter and will most likely be snapped up by bargain-hunting investors, who may seek new tenants for the properties — or just raze them.
A Westfield shopping center in London in 2008. Traditional retailers are feeling pressure from the growth of online shopping. Credit Toby Melville/ReutersThis summer, a group of Wall Street analysts predicted that nearly a quarter of the roughly 1,100 malls in America would close in the next five years.
“There are a fair amount of distressed malls out there where an experienced owner is going to get a distressed buy and figure out what type of tenants can support a particular area,” said David Kessler, a managing partner in the real-estate practice of CohnReznick.
Westfield, analysts said, has focused its efforts on marquee properties that can still draw shoppers, rather than regional malls that are more susceptible to online competition. The real-estate giant spent $1 billion giving the Westfield Century City mall a makeover in the hopes of driving foot traffic.
There, shoppers who sign up online for a reserved parking place have their license plates scanned before the gate is lifted and are directed to a space under a monitor. While the mall has its share of typical fashion retailers, it also has an Equinox gym, a medical clinic and, next year, a cryotherapy clinic.
Unibail-Rodamco would acquire the Westfield World Trade Center mall as part of a $15.7 billion deal. Credit John Taggart for The New York TimesWestfield also owns a number of premier shopping centers in Britain and is developing a new shopping center adjacent to Linate Airport in Milan that is expected to be completed in 2020.
Still, no matter how trophy the mall, they still face the same pressures.
The Westfield World Trade Center has been open for more than a year and in that short time it has dealt with delays, lawsuits and staunch competition from its next door neighbor, Brookfield Place, which is offering more luxe shopping options like Burberry, Gucci and Hermès.
Located near a PATH train hub and within the soaring Oculus structure designed by the Spanish architect Santiago Calatrava, the Westfield World Trade Center mall was largely bereft of shoppers on Tuesday afternoon.
While the two-floor Apple store buzzed with shoppers, the same could not be said of Dior, Hugo Boss and Breitling, where employees stood around looking at their phones or chatting with one another.
In the middle, near a set of pop-up stores, a woman read traditional holiday stories to children seated around her. One of her titles: “How the Grinch Stole Christmas.”

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