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Retail REITs

How mall, shopping-center, and strip-center REITs earn rent from retailers and why grocery-anchored centers held up well

What retail REITs own

Retail REITs own the real estate where consumers shop in person: enclosed regional malls, open-air and grocery-anchored shopping centers, strip centers, outlet centers, and power centers anchored by big-box stores. A related and growing format is the mixed-use or "lifestyle" center, which blends retail with dining, entertainment, and sometimes office or residential components on the same site, aiming to keep shoppers on the property longer than a traditional store-only layout. Well-known names include Simon Property Group and Macerich in enclosed malls and outlet centers, and Kimco Realty, Regency Centers, Federal Realty Investment Trust, and Brixmor Property Group in grocery-anchored and open-air shopping centers.

Retailers that lease a single free-standing building on a long-term basis — drugstores, restaurants, dollar stores — are generally covered separately in the net lease REITs guide, since their lease structure and economics are distinct from a multi-tenant mall or shopping center.

How they make money

Retail leases often go beyond a flat monthly rent. Many include percentage rent, an additional payment tied to a tenant's sales once they cross a set threshold, and most also pass along a share of property taxes, insurance, and common-area maintenance to tenants. Anchor tenants — a grocery store or, in a mall, a major department store — draw the foot traffic that supports smaller "in-line" shop tenants, which typically pay a much higher rent per square foot than the anchor itself, since the anchor's role is to bring people to the property rather than to generate the highest rent on its own. Many centers also generate incremental income from short-term "specialty leasing" — kiosks, seasonal pop-up stores, and temporary tenants in common areas — which fills space between long-term leases and adds a smaller but flexible revenue stream. Retail leases sometimes also include co-tenancy clauses, which let smaller tenants reduce their rent or, in some cases, terminate their lease if a major anchor closes and overall occupancy in the center falls below a specified level, reflecting how dependent in-line tenants are on anchor-driven traffic.

What drives demand

Consumer spending, employment, and population growth within a center's trade area all drive retail REIT performance. E-commerce has reshaped physical retail demand, but its impact varies enormously by format: grocery-anchored centers have proven far more resilient, since a weekly grocery trip isn't easily replaced by online shopping, while traditional department-store-anchored malls have faced more pressure as some anchor chains have downsized or closed stores entirely. Retailers have also increasingly used physical stores as fulfillment points for online orders — buy-online-pickup-in-store and ship-from-store — which has, in some cases, made well-located physical space more valuable to a retailer's overall business rather than purely a competitor to its website. Sales productivity at well-positioned grocery-anchored and open-air centers has generally remained more stable through economic cycles than at lower-tier enclosed malls.

Key risks

The clearest risk is a large tenant or anchor bankruptcy, which can be costly to work through: re-tenanting a vacated department store or big-box anchor often requires significant capital and time before a replacement tenant is generating rent again. Retail REITs are also exposed to shifts in consumer behavior and spending, and to broader economic downturns that reduce discretionary shopping. Property quality varies enormously within the sector, and lower-quality, over-supplied centers have generally struggled more than well-located, dominant properties in their trade area. Some struggling mall properties have been redeveloped for entirely different uses, adding apartments, medical facilities, or entertainment venues in place of vacant department stores, which can require substantial upfront capital before it pays off in new rent. At the same time, many retailers that started online-only have opened physical stores of their own in recent years, treating them as showrooms and customer-acquisition tools rather than pure sales points, which has added a partially offsetting source of new retail leasing demand.

Metrics that matter

Occupancy and leasing spreads show whether a landlord is filling space and at what rent relative to the prior lease, while same-store net operating income growth measures organic performance across the existing portfolio. Retail REITs also disclose tenant sales per square foot, a barometer of how much revenue tenants are generating and, indirectly, how comfortably they can afford their rent. Property-level traffic counts and the income and population characteristics of the surrounding trade area also factor heavily into how retail REITs and their tenants evaluate a given location. The glossary has definitions for each of these terms.

Where to see current retail REITs

The retail sector page lists every retail REIT this site tracks, including Simon Property Group's company profile, sorted by market size and yield. The screener can also help compare retail REITs against companies in other sectors on yield, size, and other metrics. For the rest of the property-type series, start with the REIT sectors overview.

See it in the data: Retail REITs → Simon Property Group profile →

Research and education only — nothing here is investment advice. Figures such as the 90% distribution rule are general and can change; always confirm against a company's filings.