| NEW YORK, June 7
NEW YORK, June 7 The head of GGP Inc,
one of the biggest high-quality U.S. mall property owners, sees
the recent spate of U.S. department store closings as a chance
to expand its redevelopment operations with plans to buy 100 of
the shuttered emporiums.
Sandeep Mathrani, chief executive of GGP, on Wednesday said
he was not against department stores but has latched onto their
concept of offering a wide range of products under one roof.
In the past six years GGP has redeveloped 115 department
stores that once were mall anchors, and the real estate
investment trust (REIT) has plans to redevelop another 100 in
the next few years.
"What we have done is, the mall has really become the
department store," Mathrani said at 2017 REIT Week, an investor
forum organized by the National Association of Real Estate
Investment Trusts. "We've done this 115 times. We have a pretty
good idea that it actually works."
Mathrani is convinced malls can thrive and overcome an
e-commerce surge, which has forced thousands of U.S. retail
stores to close in recent years, if they are filled with the
right mix of retailers with a product customers want.
Macy's closed 63 stores earlier this year, while JC Penney
and Sears Holdings announced plans to shutter about 290
department stores. Brokerage Cushman & Wakefield has estimated
up to 8,000 retail stores could close in 2017.
GGP's shares are down 9.4 percent so far this year on
investor fears e-commerce will destroy malls and retail stores.
Shares of other retail REITs are down 30 percent, but have come
off their recent lows.
Mathrani, like many other owners of retail venues, believes
the malls can survive and thrive because shoppers need to touch,
feel and see a product, and because brick and mortar resolves
the issue of the "last mile" in distributing consumer goods.
When a consumer picks up an order at the store, it costs the
retailer $0.75, Mathrani said. If the retailer ships the product
to the consumer, the cost climbs to $5, he said. While picking
up the order at the store, the consumer often shops and buys
more, a sale the e-commerce retailer misses, he said.
In short, brick and mortar has an advantage over on-line
shopping and will survive, while e-commerce needs to acquire a
physical presence to gain market share, Mathrani said.
"At the end of the day, the retailer may evolve, but the
real estate stays," he said.
(Reporting by Herbert Lash; Editing by Daniel Bases and Andrew