Investors Are Going Back To The Mall
Images of increasingly vacant malls have haunted the commercial real estate sector for years. But as investors start to smell promise, that might be changing — for some properties, at least.
Although retail real estate has become a recent darling of institutional investors, most of that activity has been confined to open-air shopping centers. But according to new research from Altus Group, malls may also be poised for a return to fashion.
As many single-asset mall sales closed in the first three quarters of 2025, 38, as in all of 2024, according to Altus, which projects more than 50 mall deals could close before the end of the year as a result of renewed investor enthusiasm. If that happens, 2025 would have the third-highest annual total of single-asset mall sales in more than two decades, behind 2022 and 2004.
Trends that made malls a risky investment as recently as two years ago, like tenant turnover, are slowly reversing, according to Altus. At the same time, after years of poor occupancy, absorption is ticking up and vacancy is holding steady, according to Cushman & Wakefield's third-quarter report.
Additionally, consumer spending has remained strong in recent months despite economic jitters, tariffs and decreasing employment numbers. And although 2026 predictions of slowing sales and rising costs worry some owners, economists believe the sector is resilient.
Best-in-class shopping centers are the poster children for renewed success for malls. Vacancies are now tight in some of the country’s most sought-after malls — Simon Property Group, the largest U.S. mall landlord, reported a 96.4% occupancy rate across its portfolio in the third quarter.
Recent deals like the $332.1M Lakewood Center sale in California show the strength of investor demand for malls, according to Altus. Lakewood's sale — despite being a steep discount from the mall’s $620M appraisal from a decade ago — came in above the new $280M value from S&P Global Ratings in May.
While brokers expect consumer foot traffic and tenant interest in Class-A shopping centers to stay strong in 2026, they are also anticipating a continued bifurcation of demand, with lesser-quality assets struggling to retain retailers that are single-mindedly pursuing the most popular destinations.
“Owners don't have as much leverage to push up pricing,” Ebere Anokute, CBRE’s Americas head of retail research, told Bisnow at ICSC New York earlier this month. “Retailers don't necessarily want the space that's left on the market.”
As a result, more struggling properties are meeting the wrecking ball. In the first nine months of the year, 13M SF of U.S. retail space was demolished, the bulk of which was obsolete mall teardowns, according to JLL. By contrast, only 7.6M SF of new retail space was delivered, giving investors more confidence that supply-demand dynamics will continue to work in landlords' favor.
