at Simon’s centres continued to climb, and sales productivity for non-anchor tenants has upshifted significantly on the back of resurgent shopper traffic. Although the new CEO, Ely Simon, wouldn’t say how much the recent buyout of the remaining stake in the Taubman portfolio might have affected reported sales and other operating metrics. In response to a question about the buyout impact, he flat-out said that “we don’t look at it”. Simon, who has just taken over the reins of the company following the death of his father, David, noted that retailer demand for space remains strong, and broad-based across emerging and legacy retailers, categories and geographies. Moreover, the pipeline of lease deals in the works is substantially greater than it was a year ago. “The new leases we are signing are 20–25 per cent higher than new leases last year,” said CEO Simon. He also noted that tenants with expirations further out into the future were already putting out feelers for a sense about renewal terms. As higher rates for both renewals and new leases blend into the rates for ongoing leases, the average base minimum rent continues to rise, by 5.2 per cent per square foot, to US$61.99 in the first quarter. Simon also noted that newer brands filtering into the portfolio are paying higher rates than others. He called out beauty brands from Asia, new athleisure brands and new home furnishings brands as good illustrations. Portfolio occupancy itself edged up to 96 per cent in the first quarter compared to a year ago. High as that is, the company still believes it can lease up to 97 per cent or higher, but it wasn’t a priority. First quarter results: off to a flyer Total revenue for the first quarter came to US$1.757 billion, up 19.3 per cent from the same quarter a year ago. The leasing component, which accounts for more than 90 per cent of Simon’s total revenue stream, also rose by nearly 20 per cent. Net after-tax income for Simon’s stockholders in the first quarter rose by 15.9 per cent to US$479.6 million. Funds from operations (FFO), a non-GAAP real estate REIT metric that adds depreciation back into net income, increased by 7.5 per cent to US$1.108 billion. Sales productivity surges as Taubman portfolio enters the mix Shopper traffic was strong during the quarter, and sales productivity climbed 11.8 per cent to US$819 per square foot for the trailing 12 months, up from US$733 for the 12 months ending March 31, 2025. Sales in the first quarter grew by a healthy year-on-year rate of 6.6 per cent on comparable space. Management was particularly pleased with how broad-based the gains were across categories, with the single exception of dining out. Ely Simon also noted that centres with relatively large exposure to European and Canadian tourism were “a touch softer”. Woodbury Commons in New York State, a favourite destination for trans-Atlantic tourists, was clearly underperforming the average on comparable-space sales growth, although it remained positive in the low single digits. Despite the general sales surge across the portfolio, variable lease income – that part of leasing revenue that isn’t fixed and tracks sales – fell from about 22 per cent of leasing revenue to just over 19 per cent. Portfolio improvements There were no new mall openings in the first quarter, at the end of which Simon’s retail portfolio stood at 193 malls, lifestyle centres, factory outlet centres and megamalls in the US and 42 factory outlet centres and malls overseas, of which 19 are in Asia. Improvement projects are underway at 29 centres, and approximately 50 per cent of the costs for these expansions and other improvements involve mixed-use projects. These, in turn, are often “densification” projects, with the addition of residential and hotel components that will feed new customers to the integrated retail properties. Two other redevelopments are repurposing former department store anchor boxes. Many more of those are sure to come as burgeoning tenant demand from new players makes the cutting up and re-leasing of demised department store boxes increasingly attractive from a mall economics standpoint. The trickle-down effect is a thing again Ely Simon noted, with pride, that tenant demand for space in Simon’s malls was not limited to the top tranche of centres but was spreading across the whole portfolio. This is a key point when getting a clear perspective of the global mall industry generally: while all the talk in the e-commerce age has focused on retail brands establishing destination stores in prime locations and then using e-commerce to reach the less worthy locations, thus posing an existential threat to malls further down the food chain, the pendulum is swinging back again. Now, brands are still putting their best efforts in the “A” locations, but neither are they ignoring opportunities in the “B” malls. This is observable not just in the US: retailers are seizing on the opportunity to get good real estate in secondary locations in Asia too, exemplified by the expansion of global retail chains in developing countries like Thailand and Vietnam. This is great for the mall industry and signals a more general resilience than just the top tranche. The mall appears not to be dead by any means, nearly 30 years after Time magazine published its famously unprophetic cover story, entitled “Kiss your mall goodbye”. Malls have survived every external shock imaginable without flinching, thanks to their ability to adapt quickly in changing circumstances. True, there has been a lot of attrition along the way, but in retail as in all businesses, it’s survival of the fittest. Further reading: What Simon Property’s results reveal about the return of physical retail