Shopping malls appear to be coming out of their pandemic-era rut, as key factors in the sector are showing signs of improvement.

Green Street's Annual Mall Grade Review found that the overall performance of the 1,000 malls it tracked improved over the last year. It upgraded 145 malls and downgraded 83 malls, with the remainder keeping the same grade. The performance review factors in tenant mix, sales, location and building condition.

“This year, Green Street upgraded more malls and outlets than it downgraded, which is a rarity,” Vince Tibone, managing director and mall sector head at Green Street, said in a blog post about the report.

The report broke down the upgrades and downgrades for three retail REITs that Green Street covers. Simon Property Group had 50 upgrades and 15 downgrades, Macerich Co. had four upgrades and four downgrades, and Tanger Factory Outlet Centers had 11 upgrades and one downgrade.

Green Street also estimated net asset values for those three REITs' portfolios, finding that Simon's NAV rose 6%, Tanger's rose 5% and Macerich's rose 1%.

Backfilling of empty spaces has reduced the number of vacant anchor boxes by 30% from a year ago to 450, according to the report.

Simon has 40 anchor vacancies, a 15% drop from last year, while Macerich had 15 anchor vacancies, a 10% drop, according to the report.

Retail REITs said on second-quarter earnings calls that anchor spaces that freed up from Bed Bath & Beyond's bankruptcy are being taken by new tenants at higher rents. Several leases at these locations have already been signed to backfill the empty spaces, resulting in rent increases of 20% or more for the REITs.

Many spaces have also been leased this year by activity-centered tenants like pickleball court operators, which have backfilled space left vacant by stores including Bed Bath & Beyond, Old Navy and Walgreens.

Investors have also shown renewed confidence in the retail sector. In the past two years, 97 retail centers and shopping malls traded hands with disclosed prices ranging from $25M to $785M, according to data from Steerpoint Capital.