Mall developer in talks with Amazon in web retail plan
For Los Angeles real estate developer Rick Caruso, online shopping isn't killing malls. In fact, he says internet-based retailers are helping his shopping centres thrive.
E-commerce companies that have opened traditional retail space in the billionaire's properties include trendy eyeglasses seller Warby Parker and Honest Co., a maker of baby and personal-care products founded by actress Jessica Alba.
Caruso said he's also talking to Amazon.com Inc. about opening retail stores for merchandise beyond the bookstores that the online retail giant already has opened.
"E-commerce is the best thing to happen to bricks and mortar," Caruso said in an interview last Monday at the Milken Institute Global Conference in Beverly Hills, California.
"The good retailers have gotten better."
An Amazon spokesman didn't immediately provide comment. The company began its bricks-and-mortar push in 2015, when it opened its first physical bookstore in a Seattle shopping centre.
In addition to books, the Seattle store serves as a place to showcase Amazon gadgets like Kindle tablets for reading e-books and the voice-activated Echo digital assistant that can stream music and news via voice command.
Amazon now has six book stores around the United States in such cities as San Diego, Chicago and Portland, Oregon, and six more planned in areas including New York, San Jose, and Paramus in New Jersey.
Caruso is known for building a new generation of outdoor shopping centres that resemble European streets and feature free trolley rides and fountains choreographed to music.
Traffic at the developer's malls, which include the Grove in Los Angeles and the Americana at Brand in Glendale, California, was up 8pc last year, compared with flat performance for shopping centres as a whole. Net operating income rose 5pc at his privately held company, he said.
"My message is constant," he said. "The mall is not dying."
Investors aren't convinced, however, judging by the recent performance of shopping mall Reit stocks, which have dropped 18pc in the past year, compared with a 4pc gain in the broader Reit group, as stores close at a record pace.
At the same time, a view is building among industry analysts that scepticism has gone too far.
Down 7pc this year, Bloomberg's BBREIT Regional Mall Index trades for 5.1 times book value, down from its 2016 high of 6.7 and roughly in line with its decade average.