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Store openings by digitally native brands picking up, Macerich exec says

Digitally native retail brands are slowly but surely moving into Macerich Co. shopping centers, and legacy brick-and-mortar players are welcoming them as additional drivers of foot traffic, the company's leadership said.

During a June 6 company presentation at the Nareit REITweek conference in New York, Macerich CFO and incoming CEO Tom O'Hern said digitally native brands, or retailers that started out selling products only online, represent about 1% of the company's non-anchor gross leasable area a figure he described as "relatively modest" but he said activity is building.

As bankruptcies and store closures have piled up among legacy brick-and-mortar retailers, real estate investors and analysts have focused increasingly on the digitally native group of brands for signs of health and growth in demand for space.

"What we're seeing today that we have not seen in prior years is multiple deals being done at the same time," O'Hern said, noting that the company has "five or six" individual deals underway with UNTUCKit, the casual men's shirt retailer, and "four or five" under negotiation with Morphe, the cosmetics company. "We're starting to see the momentum pick up."

Meanwhile, early-generation e-tailers such as Warby Parker and Peloton "continue to do deals," O'Hern said.

"It's hard to say where we'll be in five years, but I would expect it to grow fairly significantly from here," he said.

Doug Healey, executive vice president for leasing at Macerich, described the mood at the International Council of Shopping Centers' RECon conference in May — retail real estate's marquee annual event and a proxy for gauging overall sentiment in the retail space — as positive. In contrast to previous years' events, few retailers were talking about declining foot traffic in meetings.

"This year was much different. They came in, no one mentioned traffic, and no one mentioned online sales," Healey said. "What these retailers wanted to do, the ones that were successful, the ones that were performing, they wanted to showcase the product, and that's what they did."

O'Hern addressed the company's succession plan around the departure of CEO Arthur Coppola, who will retire at the end of the year after a decadeslong tenure. The executive touted the expertise, in particular, of Healey and Scott Kingsmore, current senior vice president for finance and incoming CFO, who was also in attendance. The company is "very adequately prepared," he said.

"People often refer to that as the bench," O'Hern said, gesturing to Kingsmore and Healey. "I don't think [they] have been on the bench. They've been in the game. They've been starters. And every once in a while they're even all-league."