The best malls gain from the closure of the rest

Weaker malls keep closing, and the headlines treat that as a story about the whole sector. The tenants and shoppers those malls lose do not disappear. A large share of them move to the strongest centres, which get fuller and more valuable as the rest shrink.

Consolidation by closure

Retailers want fewer, better locations, and the best centres are where they concentrate. That supports occupancy and gives landlords pricing power on new leases. Meanwhile, no one is building new malls, so the supply of top-tier space only shrinks.

It is a sector in decline with a winner's corner, and the corner is getting better.

What I'm watching

• Occupancy at the landlord's top-tier centres
• Rent on new leases against expiring ones
• Tenant sales per square foot

Where I stand

Flat. The flight to quality is real and largely recognised in the valuation. I would rather see rent growth accelerate before leaning.

What would change my mind

Leasing spreads widening while occupancy stays high. That is pricing power arriving, and it would mean the consolidation benefit is larger than the market assumes.