Mall Struggles Push REIT-Owned Property Values To Post-Crisis Lows

Weak mall valuations are putting a strain on the commercial real estate market.

Second-tier mall values have declined these past several months while retailers increasingly struggle to keep pace with changing consumer shopping preferences and e-commerce competition.

In October, mall valuations fell 6% from the previous month and they have declined 11% over the past 12 months, the Wall Street Journal reports.

The Green Street Commercial Property Price Index, which tracks the pricing of properties owned by REITs, also fell last month. The index declined 1% month-over-month to 125.5, which marks the sharpest drop since the financial crisis.

Adding to the weakening of the market is the fact that while mall REIT shares are trading at a lower rate than normal, this has not prompted asset sales, resulting in slow transaction volumes and a dramatic decline in values. In order to improve the situation and compete in the shifting market, mall landlords will need to invest money to give properties a much-needed facelift.

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