Dive Brief:
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Forest City Realty Trust said this week that it’s reviewing strategic alternatives for its retail portfolio, which includes ownership interest in 14 regional malls in markets nationwide, and 19 specialty retail centers mostly in New York City.
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Proceeds from any sale would go into the trust’s apartment and office portfolio, part of the company’s recent shift to a focus on core urban markets and products, according to Forest City President and CEO David J. LaRue.
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Forest City says it will retain its ownership in Ballston Quarter (formerly Ballston Common Mall) in Arlington, VA, which is being redeveloped into an urban mixed-use project to include office, multi-family and retail uses.
Dive Insight:
Forest City in January announced that it had converted to a real estate investment trust, and now it looks like it’s cleaning up its portfolio and ditching some retail assets.
The move is yet another sign of brick-and-mortar retail’s diminishing place in the U.S. commerce landscape. Forest City says even the retail property it will hang on to will be revamped to include more mixed use spaces, including office and residential properties. "Over the past five years, we have made tremendous progress transforming Forest City by focusing on core urban markets and products, reducing complexity, paying down debt, driving operational excellence and converting to REIT status," LaRue said in a statement.
In recent years, as more anchor stores have shuttered or migrated toward urban environments, retail centers have had to get creative with their use of space. Some such centers have integrated alternatives like farmers markets and live entertainment.
Earlier this year, retail analyst Jan Kniffen declared the U.S. the most over-stored country in the world and predicted that a third of American malls would likely close in the next few years. Kiffen, CEO of J. Rogers Kniffen Worldwide Enterprises, added that the country currently holds about 1,100 enclosed malls. But that number should be closer to 700.
“The top 250’ll do fine, and the rest of them are going to struggle,” he noted.
