Simon Property set to collect far more rent after Saks Global store exits
The mall landlord is on track to more than double the rent it was owed after Saks Global vacated roughly a million square feet of space and stopped paying.
Simon Property Group stands to collect substantially more rent income following Saks Global's decision to vacate roughly a million square feet of retail space across its mall portfolio. Retail Dive reports that Saks Global stopped paying an estimated $18 million in annual rent tied to the vacated space, but that Simon is now on pace to more than double that figure once the space is re-let, underscoring both the scale of Saks' contraction and the resilience of premium mall real estate demand from replacement tenants.
The dynamic illustrates the diverging fortunes of department store operators and the landlords that host them. Saks Global, formed through the merger of Saks Fifth Avenue and Neiman Marcus, has been closing stores and rationalising its footprint as it works through integration costs and a challenging environment for full-line luxury department stores. For Simon, the closures create short-term disruption but also an opportunity: prime mall space vacated by an anchor tenant can often be re-let to multiple smaller retailers at a higher blended rent per square foot than a single large-format lease commanded.
The situation is a useful signal for how the luxury retail real estate market is absorbing the retrenchment of traditional department stores. Landlords with strong locations are increasingly able to backfill anchor space with a mix of luxury boutiques, experiential retail and food and beverage concepts that command premium rents, a trend that has been building across top-tier US malls for several years. What to watch is how quickly Simon fills the vacated square footage and with which tenants, and whether Saks Global's broader store rationalisation continues at pace as it works to right-size its operations following the Neiman Marcus merger.
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