Shopping Center Vacancies Near Record as Consumer Confidence Wanes

Vacancies at U.S. community shopping centers approached the highest on record last quarter.

July 08, 2010

NEW YORK, NY - According to New York-based real estate research firm Reis Inc., vacancies at U.S. neighborhood and community shopping centers approached the highest on record in the second quarter, a further sign that the economic recovery is fading and consumer confidence remains weak, Bloomberg reports.

The vacancy rate at shopping centers last quarter increased to 10.9 percent, up sharply from 10 percent a year earlier and 10.8 percent in the first quarter, the highest since 1991??s 11 percent. The record for shopping center vacancies since Reis began tracking the data in 1980 was 11.1 percent in 1990.

"There are really very few reasons to believe that performance deterioration won??t continue for another 18 to 24 months for retail properties, although there are some signs that the pace of decline is moderating," said Victor Calanog, Reis?? director of research.

Out of 80 cities tracked, 11 posted increases in rents paid by tenants, one of the lone bright spots in the report. "Compared to the last two quarters, when most if not all of our markets posted declines in effective rents, this is good news," Calanog said.

According to Reis, less than 400,000 square feet of new strip mall space was added last quarter, which means increases in the vacancy rate are coming from existing properties "bleeding out."

Shopping center rents reflected the low demand, falling 2.8 percent from a year earlier and 0.5 percent from the previous quarter.

Vacancies at regional and super-regional malls remained at a 10-year high, rising to 9 percent from 8.4 percent a year earlier and 8.9 percent the previous quarter.

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