Retailer and Consumer Shift to Open-Air Malls Will Continue Past Pandemic

One of the country’s leading retail landlords says tenants and customers are returning to more of the activities they were doing before the COVID-19 pandemic began ripping around the world almost two years ago — including shopping.

Occupancy of Tanger Factory Outlet Centers’ stores was 95.3% on Dec. 31, 2021, up from 94.4% at the end of September and 92.2% at the end of 2020. The average Tanger tenant sales productivity was $468 per square foot in 2021, up 17.6% from the $398-per-square-foot rate of two years earlier, before the pandemic began.

Average tenant sales were up 15% in 2021 compared to 2019 when comparing same store sales.

“We are pleased to report another quarter of strong results, driven by positive traffic and tenant sales and accelerating leasing trends at our open-air centers,” Tanger President and Chief Executive Officer Stephen Yalof said in a Thursday (Feb. 17) press release announcing the company’s earnings.

“Domestic traffic during the quarter exceeded 2019 levels,” he said. “Tenant sales for the total portfolio reached another all-time high of $468 per square foot, generating significant percentage rental growth. Occupancy grew to 95.3%. These trends demonstrate consumers’ desire to shop at our open-air centers and retailers’ commitment to the distribution channel. We believe this momentum will continue to grow cash flow.”

The better news for Tanger is that tenants are sticking around rather than closing up shop, as lease termination fees totaled $3.6 million for 2021 ($300,000 for the fourth quarter of 2021) compared to $12.8 million for 2020 ($4.4 million for the fourth quarter of 2020).

Tanger took back about 148,000 square feet of retail space in 2021 (none in the fourth quarter) through bankruptcies and restructuring, compared to about almost 1.3 million square feet one year earlier.

Related: Mall Sales Are Up, But Shopping Centers Still Have a Traffic Problem

Yalof said in November that to solve the traffic problem at Tanger’s shopping centers, the company has focused on growing its food offerings with new sit-down, quick-serve and grab-and-go concepts, as well as the presence of entertainment stores, kiosks and other amenities aimed at driving more frequent and longer shopping trips.