U.S. retail mall vacancies rose in the second quarter from the first, amid an increasing disparity between high-end and traditional malls related to rent and vacancy rates, according to real estate research firm Reis Inc.
Asking and effective rents growth for shopping centers decreased compared with the previous quarter, Reis said in a report on Wednesday.
Retail mall vacancies rose to 7.9 percent from 7.8 percent, their first quarterly increase since the fourth quarter of 2014, the company said.
"High-end, dominant malls" continue to have very high rents and very low vacancy rates, while traditional malls still struggle with high vacancy and low rent growth, Ryan Severino, senior economist at Reis, said.
Asking rent for shopping centers grew by 0.4 percent while effective rents rose by 0.5 percent in the second quarter. Asking rent had risen 0.5 percent in the first quarter, while effective rents rose 0.6 percent.
The national vacancy rate for neighborhood and community shopping centers fell to 9.9 percent, a decline of 10 basis points from the first quarter.
Construction activity remained tepid with only 1,403,000 square feet of new shopping center space completed during the second quarter, the lowest level of quarterly completions since the second quarter of 2013. Net absorption totaled 3,291,000 square feet.
"The heyday of department stores is clearly in the past while apparel retailers (for example) compete fiercely with e-commerce," Severino said.
Severino said that although retail recovery should get a bit stronger, at least for neighborhood and community centers, "it should not be much stronger."
(Reporting by Shashwat Awasthi in Bengaluru; Editing by Maju Samuel)