Leading real estate E.T.F.s like Vanguard R.E.I.T. and iShares Cohen & Steers R.E.I.T. have also produced diminished returns over the last year.


The Wegmans store under construction in Natick.

Tony Luong for The New York Times

Some real estate sectors continue to thrive. But mall R.E.I.T.s like Simon Property Group, GGP (formerly General Growth Properties) and CBL & Associates have suffered as numerous retail outlets have folded. Simon, for example, closed June just under $162 a share. A year earlier, shares fetched about $217.

Recent closures and fears of wider surrender to online rivals like Amazon weigh heavily on R.E.I.T.s. Kingpin retailers like Macy’s, J. C. Penney and Sears have been shuttering stores, as have Foot Locker, Office Depot and Abercrombie & Fitch. Once-omnipresent chains like Payless ShoeSource and RadioShack have filed for bankruptcy.

The malls and shopping centers that host fading retailers are scurrying to find replacements, and there are some signs of success. The Natick Mall, west of Boston, lost one of its anchor tenants in J. C. Penney but has found a replacement for most of that space in Wegmans, the upscale supermarket. Wegmans could eventually produce 10 times the revenue of the departed J. C. Penney, estimates Russ Devlin, a research director with AEW Capital Management.

Still, problems for brick-and-mortar stores could worsen in the near future. Garrick Brown, director of retail research for the Americas at Cushman & Wakefield, expects 9,000 retailer closures this year. Next year, there could be as many as 13,000, he estimates.

Apparel stores in particular have been hit hard by online competition so far, but Amazon’s $13.4 billion proposed acquisition of Whole Foods could put food outlets — until now mostly resistant to online incursions — into play.

Industry optimists say the malls can successfully adjust. “Real estate mall owners are as sharp as can be,” said Richard Diamond, whose company in Cambridge, Mass., has represented both tenants and mall owners in lease negotiations.

“There are a lot of tenants who want to get into those malls,” Mr. Devlin said.

The Columbia Real Estate Equity fund’s top holding is Simon Property Group, which holds numerous prime properties: malls in densely populated high-income areas. Arthur Hurley, manager of the fund, says that while he favors Simon Property within the mall R.E.I.T. group, he has lightened up on investments in the group as a whole. “I truly believe better-located malls will be survivors, but the transition period will be difficult,” he said.

When a department store — presumably a mall’s magnet for shoppers — closes, smaller tenants often press for lower rents. Such negotiations are “being done behind closed doors,” Mr. Diamond said.

Rent pressures are strongest in lower-tier malls, Mr. Hurley said. “In better-located malls, you’re not seeing a dramatic decline in rents,” he added.

But for those malls that have lost a major tenant, finding replacements is crucial. New targets include restaurants and entertainment venues with novel themes.

Sacramento’s Downtown Plaza has been redeveloped after it “went through a death spiral,” according to Mr. Brown of Cushman & Wakefield, bottoming out with a vacancy rate of about 50 percent. The mall is now called Downtown Commons and has a new major tenant: the Sacramento Kings basketball team. With apparel retailers in free-fall, night spots were signed up. Downtown Commons will bring in Punch Bowl Social, designed to lure young adults with food, drink, bowling and karaoke. Topgolf, which offers alcohol, food and music along with competitive golf games, also took space in the mall.

Malls are looking for new ways to entertain and amuse. Table tennis is the lure at SPiN, co-founded by the Oscar-winning actress Susan Sarandon. The chain, which will soon open its seventh location, could appeal to malls “chasing entertainment concepts,” Mr. Brown said.


The Wegmans in Natick takes over much of the space formerly occupied by J. C. Penney, a onetime anchor tenant.

Tony Luong for The New York Times

Some fund managers emphasize that retail malls are not the only income-producing properties that investors should be assessing.

Mr. Hurley likes companies that rent single-family homes. As home prices keep rising, many people in the 25-to-40 age bracket are being priced out of the market. But “young people are still getting married and having kids,” Mr. Hurley said, and when they can’t afford to buy a house some are renting one instead. Therefore the Columbia fund holds American Homes 4 Rent, which buys new homes and signs up rental tenants, he said.

It also owns shares of Digital Realty, which operates data centers that contain cloud computing infrastructure. Mr. Hurley says there is still value in data center real estate, despite rising prices. “I don’t think it’s overbought,” he said. “It will continue to grow.”

For all their incursions, online sales still represent less than 10 percent of the overall retail market.

The big question, said Steven Brown, lead manager of the American Century Real Estate fund, is how much this proportion is likely to grow: “Is it 8 percent going to 10 percent? Or is it 8 percent going to 20 percent?” he asked.

In either case, online retailing’s growth has already benefited one R.E.I.T. sector: industrial real estate that hosts distribution centers and warehouses. “Industrial has seen a lot of demand from e-commerce tenants,” Mr. Devlin said. And as mall owners wrestle with their problems, yield-conscious investors have been turning to such options to bolster their returns on real estate.

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