It points to a 270 bps improvement in leased space in its U.S portfolio, to 92.8%. Research firm Costar, which monitors shopping center performance in the U.S. market, reckons mall occupancy is currently in the mid-90 per cent area so that would put Westfield considerably below the average.
Either way, things are dire and risk is elevated even for so-called "dominant" regional shopping centers. In Westfield's case, 2009 saw same-center net operating income in the U.S. decline by 3.9% and same-center sales slump by 9.5%. This latter is for specialty stores only and doesn't take account of department store performance, which was abysmal.
Even U.S. centers with relatively high occupancy are stuffed to the gills with retail names that are going downhill faster than the skiers on Cypress Mountain.
Part of the problem is that fashion is declining in importance and the retailers that do succeed going forward will be offering a great deal more value than the ubiquitous lifestyle chains that had their golden era a decade ago. Consumer demand will dictate that less space be allocated to fashion and more allocated to food, personal technology and services. These, in turn, require a complete reconfiguration of the mall as we know it.
Unfortunately, traditional development, leasing and financing practices are not quite up to the changes that consumers want. In the lag-time during which these institutions are figuring out what is going on and heave their practices into line, consumer preferences will continue to move well in advance of them. Look for U.S. mall traffic to pick up from its all time low levels of 2009, but never to fully recover from pre-GFC.