The word "mall" no longer describes one business.
It describes two.
At one end: Roosevelt Field at $1,250 per square foot, luxury waiting lists, and lenders competing for exposure.
At the other: 40 permanent closures a year, double-digit loan delinquency, and capital that no longer comes.
Same asset class. Different economics.
Green Street data: of the roughly 900 malls remaining in the US, the top 100 account for about half the sector's total value. The bottom 350 account for 10 percent.
Three signals.
Signal 1 — Class A malls are running at 95% occupancy. Revenue is growing 5% a year.
Gucci, International Plaza Tampa
The numbers are not ambiguous.
Class A occupancy: 95%. Class B: 89%. Class C: 72%. The gap is 23 percentage points and widening.
Foot traffic tells the same story. Class A malls are only 4% below pre-2019 levels. Class B remains 9% below. The recovery is real, but it is concentrating, not distributing.
Simon Property Group reported 96.4% portfolio occupancy. Brookfield's GGP arm: 95% occupied, tenant sales up 20% since 2019. Some trophy assets have seen sales per square foot jump as much as 60%.
CMBS issuance tied to top malls doubled to $8 billion in the past year. Lenders are not cautiously returning. They are competing for exposure. In the New York metro market, suburban vacancy sits at 3.9%, and leasing velocity is at a 20-year high.
What drives the flywheel: luxury-anchored tenant mix (Hermès, Louis Vuitton, Gucci), experiential tenants (Netflix venues, Pop Mart), active capital reinvestment. Simon is spending $250+ million upgrading three former Taubman properties. Pop Mart signed 20+ locations with Simon in 2026. The tenants that once defined mall traffic (department stores) are being replaced by tenants that generate cultural gravity.
Better tenants attract more traffic. More traffic attracts better tenants. Higher sales justify higher rents. Higher rents fund reinvestment - the cycle compounds.
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Signal 2 — At the bottom, 40 malls close every year. 11% of loans are delinquent.
The reverse cycle is equally powerful.
More than 11% of loans tied to regional malls are delinquent, according to Trepp. Distressed properties trade at steep discounts. Many head toward foreclosure.
The closure pattern concentrates in secondary markets. Enclosed formats from the 1970s-1990s. Department store anchors that have since contracted or exited. Markets where population growth has stagnated.
The math is brutal: the cost of repositioning a 500,000-square-foot enclosed mall in a secondary market often exceeds the value of the repositioned asset. Capital that could fund a turnaround goes to the top of the market instead, where returns are predictable. The bottom faces a capital void.
Some properties are being converted. Cushman & Wakefield tracks 50+ mall redevelopment projects across the US. Conversions to mixed-use (residential, medical, logistics) are the most active category. Enclosed interiors are being ripped out and rebuilt as open-air, outward-facing formats. But repurposing requires patient capital and municipal cooperation. Many distressed malls lack both.
Signal 3 — The supply squeeze makes the split permanent.
Less than 10 million square feet of multitenant retail was delivered in 2025. The slowest pace since 2012.
The 2026 pipeline is slightly larger at roughly 30 million square feet, but 70% is single-tenant build-to-suit. Almost no new enclosed malls are being built.
This means Class A faces almost no new competition. The supply constraint gives top-tier operators pricing power that would be impossible in a normal construction cycle. Tenants competing for space in the best centers have no alternative new-build option.
At the bottom, limited new construction does not help. Class C malls lose tenants not to new malls but to Class A malls and to strip centers that offer lower operating costs and better omnichannel integration.
The K is not cyclical. It is structural. And the construction pipeline ensures it persists.
What we're watching
→ Simon's $500 million Sagefield development near Nashville. A new-build mixed-use center from the largest US mall landlord signals where institutional capital sees the next generation of retail real estate.
→ Macy's "Reimagine 200" rollout. The department store's turnaround is a live test of whether Class A positioning can be engineered, not just inherited.
→ Whether CMBS issuance for top malls continues accelerating. $8 billion in one year is a doubling. A second year at that pace would confirm structural repricing, not a cyclical bounce.
→ How many of the 50+ Cushman-tracked redevelopment projects reach completion. The conversion pipeline is ambitious. Execution is the bottleneck.
→ The four tenant categories clearing underwriting fastest: off-price (Ross, Burlington), hard-discount grocery (Aldi), fitness (Crunch Fitness), and high-volume QSR (Raising Cane's). If your leasing pipeline doesn't include at least one, you're fighting the market grain.
The mall has split.
95% occupancy at the top. 72% at the bottom. $1,250 per square foot at Roosevelt Field. Forty closures a year at the other end.
The question is no longer "how is the mall sector doing?"
It is: which side of the K are you on?
That's the signal.
Mati
Editor, Malls Money
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