Highlights

• Recent surveys indicate that young Americans have renewed their interest in spending a substantial amount of their time at retail malls.
   
• Rents at strip centres are rising due to limited new construction and expansion by grocery, discount and service-oriented retailers. Green Street forecasts annual strip centre supply growth of only 0.3% during 2026-30.
   
• Valuation is attractive with a 2027 DPU yield of 10.9% (Kimco Realty: 5.1% and Regency Centers: 4.2%). Maintain BUY. Target price: US$0.63.
   

Analysis

• Young Americans returning to retail malls. A survey conducted by Ipsos Consumer Tracker in Jul 26 found a 9ppt increase in adults aged 18-34 who visit malls “often” or “sometimes”. Another research conducted by Stagwell found that Gen Z spend an average of 2.6 hours per visit, longer than any other age group. These findings indicate that young Americans have renewed their interest in spending a substantial amount of time at retail malls.
   
• Supply of enclosed mall has contracted as weaker properties close or are redeveloped. Green Street estimated that roughly 900 malls remain nationwide, down from 1,100 in 2008, representing an 18% decline, caused by competition from online shopping, closure of department stores and pandemic disruption. New construction is scarce due to high development costs and lengthy approval processes. The last major opening of an enclosed mall occurred in 2019. The closures and limited new supply have reduced competition for well-located malls that survived the retail Apocalypse, helping them attract more shoppers and tenants.
   
• Rents at strip centres are rising due to limited new construction and expansion by grocery, discount and service-oriented retailers, which increased competition for well-located space. Landlords can raise rents when leases expire, particularly at grocery-anchored strip centres serving everyday needs in affluent suburban communities. Green Street forecasts annual strip centre supply growth of just 0.3% between 2026 and 2030, compared with a long-term average of 1.0%. Kimco Realty reported that leases signed for comparable spaces in 2Q26 achieved cash rents averaging 13.1% above previous levels, including increases of 40.4% on new leases and 6.1% on renewals. Rental uplift is substantial when retail space is re-let.