Simon Property Group Sees Leasing Surge as Traffic, Rents and Retail Demand Rise

Leasing demand remains strong: Simon Property Group signed more than 2,300 leases totaling over 9.5 million square feet in the first half of the year. New-deal rents rose 17% year over year, while tenant allowances fell 12%. Retail performance is improving: Occupancy was about 96%, shopper traffic accelerated to 3.4% growth in July and August, and comparable sales increased approximately 5.7% in the second quarter, with no material consumer pullback reported. Simon is investing in growth and digital initiatives: The company has $1.1 billion of projects under construction and plans to launch the Simon Media Network on Oct. 2, using its shopper data and more than 4,000 digital screens to attract advertising partners. MarketBeat previews the top five stocks to own by October 1st . Three Oversold REITs With Strong Fundamentals Simon Property Group NYSE: SPG said leasing demand across its retail portfolio remains strong, with management citing rising shopper traffic, higher retailer sales and continued interest from domestic and international brands. At a company roundtable, Chief Executive Officer Eli Simon said the operating environment remains favorable as retailers prioritize physical stores. Through the first half of the year, the company signed more than 2,300 leases representing over 9.5 million square feet. About 27% of those agreements were new deals. Get Simon Property Group alerts: Sign Up AI Panic Hits Wall Street: 3 Financial Stocks on Sale New-deal rent per square foot increased 17% from the prior year, while tenant allowances per square foot declined 12%, Simon said. The leasing pipeline was running more than 25% ahead of the pace reported at the end of the second quarter, according to management. Occupancy, traffic and consumer trends Simon said occupancy, which was around 96%, has room to increase. The company expects to end the year with occupancy above its level at the end of the prior year, while continuing to adjust tenant mixes and redevelop space. 2 REITs That Look Attractive in a Stable Rate Environment “Our job is to choose the right tenant and the right tenant for that space, and then go to the next center and keep on doing it,” Simon said. Management said consumer activity remained healthy through the back-to-school period. Simon cited comparable sales growth of approximately 5.7% in the second quarter. Shopper traffic increased 1.3% in the first quarter, 2% in the second quarter and 3.4% during July and August, he said. Retailer sales and traffic gains were broad-based across categories, geographies and the company’s mall and outlet platforms, according to Simon. He said the company had not seen signs of a material consumer pullback. Portfolio investment and redevelopment Simon Property Group has about $1.1 billion of projects under construction with an expected 9% yield, roughly half of which involves mixed-use development. Management expects another $600 million of projects to begin by year-end, with a development pipeline exceeding $4 billion beyond those starts. Simon said the company continues to pursue renovations, redevelopments, exterior-facing retail space, outdoor areas and new restaurant pads. The company’s strategy is centered on maintaining relevance at established properties through ongoing investment, he said. Management also addressed approximately 1 million square feet of space it took back during the quarter, including former Saks space. Simon said the space was substantially re-leased or out for signature within about 90 days and characterized the situation as an opportunity to secure “really good real estate back” and re-lease it at higher rents. Digital data and retail media efforts The company is scheduled to launch the Simon Media N...