Though the strongest malls are still doing well, so many weaker properties are doing badly in the wake of the coronavirus pandemic that U.S. malls have lost a third of their value since 2017, according to Green Street data.

The slump in valuation is in line with earlier estimates this year. In June, Fitch Ratings reported that appraisal valuations received for CMBS specially serviced retail-associated loans declined 34% compared with valuations at issuance since the start of the pandemic.

The largest declines in valuation were in Class-B and Class-C regional malls, both Fitch and Green Street report.

"Fitch’s loss expectations have increased on underperforming regional mall loans and incorporate significantly higher cap rates than used at issuance, as well as additional haircuts to servicer-reported NOI," Fitch said.

At the same time, strip center values have increased by about 5% since the previous peak in 2016 and by 13% since the onset of the pandemic, Green Street reports.

Even so, strip centers have appreciated less than most other property types over the last five years, with self-storage, industrial and apartment valuations far outstripping any kind of retail.

The slump in mall valuations is driving a number of major owners to sell. Unibail-Rodamco-Westfield in particular wants to shed some U.S. assets to pay down debt it took on in 2018 to buy Westfield’s portfolio, The Wall Street Journal reports.

Mall owners are also getting out of the game by returning malls to lenders. Since the beginning of the pandemic, owners have relinquished 20 malls to their lenders, Green Street reports.