Mall goliaths
US real estate company General Growth Properties has announced it will buy rival Rouse Company in a $12.7 billion deal. Rouse is one of the US's largest holders of commercial real estate, with 50 shopping centers and over 100 office buildings. It specializes in upscale retail sites like Faneuil Hall Market in Boston. South Street Seaport in New York, the Gallery at Baltimore's inner harbor, Fashion Show Mall in Las Vegas, and Water Tower Place in Chicago. It is also a developer of planned communities like Columbia. Md. and Bridgelands in Houston.
General Growth owns or manages over 150 shopping malls across the country. It is the #2 owner of malls after the Simon Group. Simon Group recently bought out Chelsea Property Group for $3.5 billion, adding 35 extra malls to its group. Both Simon and General Growth have spent scores of billions of dollars to expand in the past decade. Between the two companies, they control nearly 45% of malls nationwide.
The Rouse acquisition puts General Growth into the business of owning destination malls, but more important, it puts it into a position of even greater strength with the retailers who seek to operate in its malls. It's often been noted that all shopping malls are essentially the same, with the same shops arranged in the same way. The more extensive the mall chains, the more pressure they can place on the retailers - there's hardly anywhere else they can go. More important may be the ability to the big chains to capture the hottest retailers (like Anthropologie and Urban Outfitters) and steal them from other real estate developers. Finally, it increases the company's political base.
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