Bloomberg Surveillance: Can Malls Claw Their Way Out?

R dot com slash CME Futures. US docks are a little changed following your report at the US economy expanded at the slowest pace in three years. We checked the markets every fifteen minutes throughout the trading day on bloomberg S and P futures up a point down features of twenty two, Nasdaq futures down two and a half. Tax in Germany little changed ten, Your Treasury down six thirty seconds, held two point three one percent. Nin Max screwed oil up one percent or forty six cents to forty four

a barrel. Comex School little changed, up forty cents to twelve sixty six thirty announced the euro dollar oh nine one to the en one eleven point five seven. Chevro now performing analysts estimates as searching crude oil prices dumptail with cost cuts to push profit to a three year high. Ex On Mobile also beat. And that's a Bloomberg business flash. Toma David hearing things so much, David Gurr in Washington. I'm Tom Keenan New York. This is a treat we

could literally go. It's like Howard Divinovan's, but calmer and more professional. Think of Howard Divinovo's at Harvard Business School. And that's sort of where you get Byron carlac is with us with p w C. Price Water. I'm sorry, it's Price Waterhouse Cooper's because that old t W seen in Byron has a Texas accent. That's what you do when you work with Tramwell Crow for a million years. I go to your old website and there are no males on that website. Even Crow Holdings is like almost

embarrassed about malls. Are malls dead? You know? It's interesting. I don't think they are dead, but they're changing relevance. And so when you think about what's happening, there's a huge disruption in the middle. And there this comment that we keep caring. Mediocrity in the middle is dead. Experiences

are actually pretty exciting. There's a lot going on in some of the better malls, and they're grading themselves A, B and C. The A malls are doing quite well, but everything is being disrupted by e commerce and relevance. Do they get bulldozed? The seam walls, the B malls get bulldozed. What becomes of those photos that we see in every article about the death of your world. Well, in real estate, it's called adaptive reuse. And once you see a developer take control of a site again, excuse me,

adaptive reuses what we do with a coffee continue. So imagine that one anchor at one end being torn down and released to someone else, or becoming an apartment building or a hotel. If you think about when those malls were built, generally many of them were built because traffic counts were high in the location was good, and so you have great sites that can be redeveloped or repurposed.

But the bottom line is we're over retailed in America twenty four feet per person twenty four gross rentabal square feet per person, more than double any other industrialized country in the world, and more than double any other con Yes, yes, I believe the next country is eleven square feet per person. He's looking at you, David, jump in here because Byron

is looking at his numbers from BWC. Byron I was at I was at a wedding a couple of weekends back outside of Washy should have fifty miles outside of town, and we were. We were in what I think you could call them all. It felt like a created village. However, the notion of them all has changed, hasn't it what you what you'd find there and what it looks like, it really has. I mean, think about the different uses you see in them all today compared to what you

did even five years ago. Where automotive companies are using them as showrooms. You see health, wellness and fitness taking the place of traditional apparel retailers. Uh. You see landlords introducing new concepts that inspire visitation with families and children. You see that um health health uses taking space in retail configurations, and so yes, the the uses are changing

to become more relevant to the demographics. When you look ahead a year, five years, what's the what's the role of a brick and mortar retail establishment going to be what's gonna, what's gonna, what's gonna compel me to go to that place? Well, so remember you know nine of sales are still done in brick and mortar uh situations. So e commerce is growing at twenty a year, but it still represents only eight and a half to eleven.

You guys always go to the revenue line down the income statement and given mall, as David was mentioning, it had given mall, where's the profit? Is it in the food, is it in clothes? Or is there just no profit? Well, so the branded, the igh end branded retailers still pay the highest rents. Rents in many mall settings this year were flat to down two. So the rental strength, the ability for landlords to control the rents in many retails

situations has changed to their detriment. However, the relevance of brick and mortar is still very important to the retail shopping experience. Based on how much is still done in brick and mortar environments. Out of these out of these businesses set themselves apart. You broke in most recent note, there's no room for mediocrity. Well, what's the chief thing that that a retailer has to do it. At this point, we believe it's the experience if the product can't differentiate itself.

And there are there are designers that are really trying to add whimsy and reason to come try on their new Spring lines. For example this Spring, whether it's a pop up shop that's selling hats for the Derby or Easter, or a store that treats you like a guest in a hospitality experience that makes your experience that much better than sitting in front of your computer. I think it's driven by product on one end and experience on the other. Can I go to the French elections? Now? We got

to do that. Here's a here's a factory, folks fare right now. There are thirteen thousand, three hundred tons of steel in the Mall America. That's two Eiffel Towers. The Mall of American Minnesota is like the mother of all malls. What's its future? That's a great question for that for that, not for that particular mall especially, you wonder can they keep the experience relevant so when it opened and really still people go to Minneapolis for mall vacations, for that

particular vacation. But inside. Can they keep it relevant with the rides of the family experiences, the hospitality experience in the hotels. It has to be worth that visitation, and the question is can the landlord keep it relevant in that regard. We would like to have you back again to do a longer treatment. This is really the Amazon and the death of bricks and mortars topic one for

so many people. Byron Carlac with US with p WC their US real estate practice as well this morning, and folks point from the emails that David and I get this is just extraordinary interest is of course, David, you could shop near our Washington studios. I tweeted this out looking out at your favorite clothing blocks away. I hope you dark in the door and went for the little I'll give you the key, David Guray in Washington. I'm Tom keenan New York stay with US Worldwide Coast to coast.

This is Bloomberg coming up here on bloomberghre Valance of conversation about fixed income with the Fixed Income ce IO at Franklin Templeton. That's Chris Blamphy. That's coming up here on Bloomberg. Surveillance from Bloomberg Radio David Day in Washington Today, Tom Keane in New York