Simon Says ‘How Ya Like Me Now?’

In the depths of the pandemic just a few short years ago, malls and brick-and-mortar retail in general were in dire straits, with mounting closures (and prominent bankruptcies such as Sears and Toys R Us), disappearing foot traffic, and the seemingly unstoppable rise of e-commerce. 

Even Simon Property Group, or SPG, a giant in the sector with 232 locations globally, saw a 20 percent cash flow decline during a tumultuous 2020 and sued one of its biggest tenants, Gap, for back rent. 

But steady performance from this multigenerational mall concern has seen it ascend to a loftier, steadier perch since.

“Retail is a bit like Michael Myers from ‘Halloween,’” said Mark Sigal, CEO of Datex Property Solutions. “How many times has he been declared dead only to pop his head up?”

And, as retail continues to rise again, few owners and operators can claim such concentrated control of top-flight spaces as SPG. The firm’s second-quarter earnings this year showed a dramatic increase in net income — from $493.5 million during the same period a year before to $556.1 million — and an occupancy rate of 96 percent, an annual increase of 40 basis points. The performance led CEO David Simon to declare, “We’re quite bullish about what we’ve done, what we are doing, where we are going, despite all of the headlines that are out there.” 

The bull run continued in the third quarter, too. Simon reported real estate funds from operations amounting to $1.21 billion in the third quarter, compared to the $1.15 billion announced in the previous quarter. It also signed 1,000 leases in the third quarter totaling about 4 million square feet. Occupancy in its portfolio was up to 96.4 percent. This represented an improvement from the 96.2 percent occupancy seen at the end of the third quarter last year.

A recent analysis from the investment bank Ladenburg Thalmann described the real estate investment trust as “dominant,” with ownership of 26 of the top 46 malls in the country, including five of the top 10: Sawgrass Mills in Sunrise, Fla.; Aventura Mall in Miami; King of Prussia in the Pennsylvania city of the same name; the Galleria in Houston; and the Forum Shops at Caesars in Las Vegas. 

A dozen of SPG’s locations make $100 million in net operating income each every year. The REIT’s market cap has tripled since the start of the pandemic, too, from $20 billion to $68 billion.

“I do believe they’re at the forefront of understanding how to really not just be a mall owner, but to be fundamentally a consumer destination operator,” said Bryn Feller, a senior vice president at capital markets firm Northmarq. “I think of them as operating a retail theme park. Nobody else does that.”

Simon Property Group declined an opportunity to comment for this story. 

The current retail landscape, like the broader economy, remains a story of bifurcation writ large, said Feller, with the gaps widening over the past year. One segment of the shopping center landscape has thrived by becoming a nexus for entertainment and shopping experiences, including dining. Another segment in decline — burned by big-box bankruptcies and exits, underinvested in and underwhelming to consumers — has been eviscerated. 

Feller expects a sharp contraction of these underperforming assets, predicting a transformative five-year period where cyclical trends, the cost of capital, and loan maturities mean a turnover of 20 to 30 percent of the nation’s remaining malls. 

Feller points to Walmart’s purchase of a Pennsylvania mall and Dillard’s buying a Texas mall where it operates as signs of distress. For these big retailers, the price of these underperforming assets sunk so low that it makes sense for big brands to buy the mall and then turn it into a funnel for driving shoppers their way. 

“It’s no longer the horse driving the cart — it’s literally the cart driving the horse,” said Feller.

Simon, with its dominant collection of high-performing assets, has benefited from more lucrative aspects of retail’s bifurcation. The operator has been praised for being aggressive about many day-to-day details, including better food courts and entertainment, a propensity to try more pop-ups, and its support for omnichannel shopping. Vince Tibone, analytics firm Green Street’s director of industrial and mall research, said Simon has been a well-run, stable platform in the last five years. That day-to-day success has also been buoyed by smart investments, including the purchase last June of Brickell City Centre in one of Miami’s most sought-after areas for $512 million.

With such a large portfolio — which grew due to the December 2020 acquisition of Taubman’s 26 malls for $3.4 billion  — Simon has exposure to Class B centers, which are often haunted by declining traffic and the potentially devastating loss of anchor tenants. But, after years of shedding many of these assets, Simon has instead reinvested in many of them, as well as diversified its holdings to include outlets in Europe and Asia. 

R.J. Hottovy, head of analytical research at foot traffic tracker Placer.ai, said it’s part of a larger trend in the industry to invest more in B-level properties. The high demand for retail space has made these upgraded malls an increasingly attractive option for tenants, he said. 

Simon’s redevelopment strategy — usually focusing on mixed-use layouts, smaller stores, outdoor shopping and experiential retail — have often been successful, and the firm said in its first-quarter 2025 earnings report that it plans to spend half a billion dollars on such projects this year alone. Feller highlighted the ongoing update of the Class B Smith Haven Mall on New York’s Long Island, which feels “more like a community in a village,” she said. David Simon told analysts he expects a 12 percent return on that investment. 

SPG has also sunk considerable capital into retail brands, referred to as “Other Platform Investments” in its earnings reports, to help stave off the loss of anchors like JCPenney and other key tenants during particularly challenging pandemic years. The effort has been largely successful outside of Forever 21, which SPG partnered with Brookfield and Authentic to acquire but which filed for bankruptcy earlier this year and closed all its stores. The effort has by and large prevented strategically damaging departures at the most inopportune times. That’s why Tibone called these investments a “home run.”

Average mall store sizes have been decreasing, making the art and science of creating the right tenant mix and store placement even more important. This is another area where Simon excels. 

Mobile data and smartphone tracking of shopper traffic patterns and dwell times — made easier with cameras and Wi-Fi networks in enclosed mall spaces — as well as extensive sales data, combined with the company’s vast scale, give it a data advantage when it comes to signing tenants and placing them in the most advantageous spaces. Datex’s Sigal said the REIT has embraced tech and “rigorously tracked” tenant sales and occupancy costs, benchmarking them in pursuit of better performance. 

As David Simon said during the company’s latest earnings call, “All we’ve done is run our business appropriately, and we’ll continue to do so.”

“These malls are incredibly difficult operational assets, more so than something like an office park,” said Cole Perry, director of research for Altus Group. “I think your institutional owners, with institutional dollars, are going to be the ones that actually win out here.”

Malls and retail still need to reckon with the full impact of steeper tariffs and an economy starting to show cracks, said Perry. And Placer.ai’s Hottovy said he’s seeing more potential iffiness in the market — such as geopolitical uncertainty and macroeconomic strife — than he ever has before. 

But, narrow the focus to leasing and transaction trends, and there’s plenty of upside potential for owners like Simon.  

Transactions for malls in the U.S. averaged about 50 a year for the last five years, said Perry. But there were 50 such transactions in just the first nine months of 2025, he said, suggesting that slightly easier financing (read: short-term interest rate cuts) may lead to more sales. And Perry found that not only is the percentage of mall space up for lease declining, but there’s also a gap of roughly 7 percent nationally between in-place and market rent. That means not only do landlords have less pressure to fill vacancies — but when they do, they can also realize more income by signing new tenants to higher market rents. 

By and large, these new tenants care not just about the sales in the mall, but also how mall locations impact things like omnichannel spending and online buying in the nearby area. Green Street’s Tibone said that’s why, despite mall sales being stagnant for the last two years — including at Simon’s many desirable locations — the cash flow of malls and shopping centers, and the demand for space, has increased. Factor in nearly no new mall construction nationally right now, and these data points only underscore Simon’s potential. 

“Simon is the most stable mall platform, and that matters to tenants when they’re deciding whether they’re going into a mall,” said Tibone. “Simon is winning in that respect, because their platform gives them that advantage.”