With Thanksgiving falling on Nov. 28 this year, the result was one of the shortest holiday shopping seasons in memory, with only 27 days between what traditionally has been the start of the shopping season and Christmas.
Still, the National Retail Federation projected strong holiday spending, forecasting up to $989 billion for the shopping season—a 3.5% increase over last year’s figures.
According to ICSC’s 2024 post-Thanksgiving weekend survey, brick-and-mortar stores remain integral to the shopping journey, with 78% of consumers making purchases either in-store or online for in-store pickup. Among those collecting orders at physical locations, 70% made additional purchases.
REITs operating in the retail real estate sector have been bullish on what they’ve seen so far, with consumer spending remaining strong despite inflation and consumers facing a heavier debt load. REIT.com spoke with four retail REITs to hear what they are seeing on the ground this year.
Foot Traffic Gains
Urban Edge Properties’ (NYSE: UE) retail concentration is between Washington, D.C. and Boston, with approximately 75 assets in that corridor. Jeff Mooallem, COO of the New York-based REIT, notes any fears about the consumer not coming back to shop in-person following the pandemic have been put to rest by what has been seen this year and last.
“The big revelation of the last couple of years is that the consumer is far more resilient than the markets maybe gave credit for, and we are still continuing to see increases in foot traffic and across most of our tenants, increases in sales as well,” he says. “People still come out for Black Friday opportunities, still come out for giveaways, and like to get lunch and make a day out of their holiday shopping experience.”
Leslie Swanson, executive vice president and COO of Tanger (NYSE: SKT), helps lead a retail portfolio that consists of 38 outlet centers, one adjacent managed center, and two open-air lifestyle centers across 21 U.S. states and Canada.
“Knowing Thanksgiving came later, we started promoting Black Friday in the beginning of November and pushed the value and additional discounts and worked with our retailers to bring those to life,” Swanson says.
That strategy, she adds, resulted in foot traffic gaining over last year much earlier in November. “However, we sat on pins and needles wondering if it would impact the bump we normally see on Black Friday and the weekend after, but that was the furthest thing from the truth. Shopper sentiment was incredibly popular.”
Meanwhile, Macerich (NYSE: MAC) owns and operates a portfolio of 41 retail centers throughout the U.S., with marquee properties including Tysons Corner in the Washington, D.C. area; Scottsdale Fashion Center in Arizona; and FlatIron Crossing in the Denver/Boulder corridor of Colorado.
“With the condensed period, a lot of retailers generated promotional opportunities prior to Black Friday, so that launched enticement for the consumer a little earlier, and we have great optimism for what we’re expecting,” says Michael Guerin, executive vice president of leasing for the Santa Monica, California-based REIT.
“Our traffic over the Black Friday weekend was up 5.6% year over year. We continue to see a resilient consumer, one that seeks value, one that is selective, and responds to the promotions that retailers are offering,” he says.
Stephen Lebovitz, CEO of CBL Properties (NYSE: CBL), says Black Friday weekend “sent a strong message as we saw mid-single digit increases in traffic for the entire Thanksgiving week, including increases on the Wednesday before Thanksgiving and on Black Friday.”
The Chattanooga, Tennessee-based REIT owns and manages a national portfolio of 91 properties across 21 states, including 55 enclosed malls, outlet centers, and lifestyle retail centers, as well as 30 open-air centers and other assets.
“Anecdotal information from our retailers over Black Friday weekend indicated strong sales with several retailers meeting or exceeding plan and prior year sales by late afternoon on Friday. With the shortened shopping season, we also saw significant traffic on the Monday after Thanksgiving, which is typically when we see a lull,” Lebovitz says.
E-Commerce Impact
There was once a belief that online shopping was going to kill the mall, but Guerin at Macerich notes the two shopping experiences have become mutually beneficial to each other.
“You might go online and learn about a brand and what you may want, but then you go into the store and buy,” he says. “Or it might be the other way around; someone might see something in a store and then go and buy it online. We’re seeing a real synchronicity between the two.”
Mooallem at Urban Edge notes that while the perception used to be that $1 of online sales meant $1 less of in-person sales, the market has come to realize that’s simply not true. All one needs to do is look at the first couple of weeks of the holiday shopping season this year to see both are strong.
“The two complement each other very well, and many people want the flexibility of having both opportunities,” he says. “When you have shopping centers that are well located with easy parking, it’s a very attractive conjunction with online shopping. Retailers have found it boosts overall sales,” he says.
CBL Properties’ Lebovitz notes that numerous retailers across CBL’s portfolio reported that buy online, pick-up in-store orders drove traffic throughout Black Friday weekend and on Cyber Monday as more retailers have been successful in creating a seamless shopping experience and meeting the customer where they are.
Brands Performing Well
The majority of retail brands and tenants are performing well, with Lebovitz noting legacy mall brands, including Gap and Abercrombie & Fitch, have had strong bounce-backs.
“American Eagle, including their Aerie and Offline brands also performed well,” he says. “Categories such as beauty, active wear brands like Lululemon, and restaurants have also fared well. Box office hits like Gladiator II, Wicked, and Moana 2 have driven significant movie theater traffic, which benefits our malls and on-campus restaurants.”
Mooallem shares that those that do a good job of having different product types, price points, and catering to different customers will always do well during the holiday shopping season, and points to retailers like TJ Maxx, Burlington, Five Below, and Sephora as companies doing things right.
“We don’t see any slowdown in the traffic in those stores,” he says. “We also see a tremendous demand for some of our footwear tenants, Nike in particular, and we’re excited about the traffic they are generating. Gap is another that has come back really strong this year.”
Guerin points to brands like Abercrombie & Fitch, department stores like Dick’s Sporting Goods, and the cosmetic category overall as being early winners of the holiday season.
A Festive Strategy
Holiday shopping is as much about the family traditions as it is about the deals and many REITs are leaning into a strategy focusing on this at their retail offerings.
“Throughout the holidays, we host events including Santa arrival parades, tree lighting events, holiday music and dance performances, as well as Santa photo experiences,” Lebovitz says. “All these experiences put customers in the holiday spirit and are built into many family’s holiday traditions.”
Swanson notes that during the holiday season, Tanger raises its focus on holiday activities across its retail properties.
“We want to make sure we fall into a tradition for the families and communities, and this year we elevated the amount of tree lightings, the Santa interactions, the choir singings in our common areas. Anything we could do that would be relevant to our shoppers we started to roll out in November,” she says. “We have a holiday cheer truck that travels across the country, and it visits our centers to provide free giftwrapping and hot chocolate and other surprises.”
Looking Ahead
The 2024 holiday shopping season may be used as somewhat of a barometer as to how the 2025 retail sector will perform, and many REITs are using the information learned to help their investment strategies moving forward.
“The strength of the holiday sales and ongoing consumer preference for in-person shopping and experiences continues to reinforce and influence our investment decisions,” Lebovitz says.
For Tanger, the positive momentum it has seen throughout the weeks leading up to Christmas has made it think more about its strategy for the year ahead.
“Everyone wants value and is driven by promotions, and we feel very positive about the outlook for 2025,” Swanson says. “We have a lot of retail momentum and excitement of retailers wanting to join our portfolio and we are listening to what the consumers want. We are elevating the merchandising mix. We feel positive about the growth we will incur over the next 12-24 months.”
Urban Edge Properties is happy with where retail sits right now, with fundamentals the best the company has seen in a long time, and supply-and-demand metrics in the REIT’s favor.
“There’s a really nice diversification of what’s in shopping centers today versus what was in them 20 years ago, which I think sets the industry up really well for the future,” Mooallem says.
“Looking at what’s happening this holiday season, it helps us understand what tenants are in expansion mode and which are in contraction mode,” he adds. “That means the season can be sort of a canary in a coalmine for us as investors to see what’s not working in the eyes of consumers and it helps us gauge what the most important brands are for us to put into our properties going forward.”