That empty feeling: Shopping mall vacancies hit a 7-year high

The trend is driving down retail rents nationwide amid surging e-commerce

TRD NATIONAL /
Oct.October 03, 2018 02:00 PM

An empty mall with “For Rent” signs (Credit: iStock)

Despite all the doom and gloom over shopping malls, one key figure remained fairly strong. Nationwide, average rents have either stayed the same or ticked up from one quarter to next for the last seven years.

Until now.

In the third quarter, the average rent for malls was $43.25 a square foot — down from $43.36 in the second quarter, the Wall Street Journal reported. Rents had not slid quarter over quarter since 2011, the report said.

At the same time, mall vacancies climbed to 9.1 percent from 8.6 percent in the second quarter, as e-commerce continues to grow. That’s also the highest level since 2011. The Bon-Ton Stores and Sears closings boosted the vacancy rate.

Many lower-end malls have faced an uphill battle despite stronger economic indicators. They have struggled, particularly in areas like Pennsylvania, Ohio and Michigan, which have an oversupply of shopping centers. Earlier this year, large retail vacancies hit an all-time high in the Chicago area.
But one expert was not hitting the panic button just yet.

“The retail sector is still correcting,” Barbara Denham, senior economist with Reis, told the Journal.

On the flip side, malls in more affluent areas are faring well. Higher-end shopping centers with features like restaurants and theaters, and less competition, have been drawing in wealthier customers.

Other mall owners, like Macerich and Hudson Pacific Properties, are seeking alternatives for unused space or shuttered properties, such as bringing in co-working companies and creating flexible office space. [WSJ] — Meenal Vamburkar


Related Articles

arrow_forward_ios
Clockwise from top left: 312 West 34th Street, 61 North 9th Street, 639 Classon Avenue, and One Fulton Square (Credit: Google Maps)

These were the top 10 NYC retail leases in July

When it comes to retail, “real estate in New York is fundamentally broken”

“I can talk about erections all day”: NAR tech consultant’s bizarre fireside chat

Council member Vanessa Gibson (Credit: New York City Council)

Commercial landlords face new fines as City Council passes anti-harassment bill

As House begins impeachment inquiry, here’s what we know about Trump’s Ukraine-real estate ties

Embattled Prodigy Network CEO Rodrigo Niño to step down

The Watchtower building at 25 Columbia Heights, CIM Group’s Shaul Kuba (right) and LIVWRK’s Asher Abehsera (Credit: Wikipedia, CIM Group, and LinkedIn)

JPMorgan leads $335M refi for CIM and LIVWRK’s Watchtower renovation

Multifamily market still reigns in Queens, Blackstone balks after rent reforms and more of the biggest CRE trends right now

arrow_forward_ios