Capricorn Retail Advisors reposted this
U.S. Outlet Centers - State of the Industry Part 5 - Outlet Center Occupancy Rates, Tenant Occupancy Cost Ratios Both Simon Premium and Tanger portfolios (combined they are 80% of the U.S. outlet center GLA) report very healthy occupancies north of 95%. These are at or even above pre-Covid rates. Each of these Landlords have a component of “temp tenants” within those numbers with each of them defining what a “temp” is, in their own way. Tanger recently reported that their temps comprise approximately 10% of their 95%+ occupancy. The Simon Premium temp component is known to be closer to the mid-single digits. As many of the Covid-era “space fillers” get absorbed by permanent retailers, this component of occupancy will continue to reduce, obviously dependent on positive economic conditions. And as that occurs, you will see incremental positive rent spreads for these owners by replacing (where they can) temp local or even national pop-up tenants with long term national brand leases. And for a key profitability metric for retailers, Tanger reports an average total rent/sales ratio of it’s tenants at 9.4%. Simon Premium does not regularly report on occupancy cost ratios for it’s outlet properties, but it is known to be traditionally above 10% and even into the low teens in certain centers. And of note with the higher sales per square foot performance of many of it’s centers, there are economies for retailers to be profitable (to an extent) at a slightly higher occupancy cost ratio.