* U.S. regional mall vacancy rate hits 9.1 pct
* U.S. strip mall mall vacancy rate could break 1990 record
By Ilaina Jonas
NEW YORK, April 7 (Reuters) - The national vacancy rate for large U.S. malls in the first quarter reached its highest rate in at least a decade, as some retailers decided to look elsewhere after shuttered department stores and other anchors turned off shoppers.
Reis Inc’s quarterly report released on Thursday showed the vacancy rate reached 9.1 percent in the first three months of the year, up from 8.7 percent in the fourth quarter. It was the highest vacancy rate since the commercial real estate research firm began tracking the market in 1999.
“The American consumer is coming back, which is good in terms of the economic recovery,” Victor Calanog, Reis vice president of Research and Economics, said in a telephone interview. “But it really still has yet to make its way to a rising demand for retail space.”
Asking rent at regional malls dipped 0.1 percent to $38.75 per square foot.
Mall operators such as Simon Property Group Inc (SPG.N), Macerich Co (MAC.N), Pennsylvania Real Estate Trust (PEI.N) and Glimcher Realty Trust GRT.N are expected to report their first-quarter results in late April and early May.
(Graphic of mall vacancy: r.reuters.com/vap88r )
Strip mall landlords more keenly have felt the retailers’ soft demand for space. On the surface, the first-quarter vacancy rate did not look so bad, with the national vacancy rate flat at 10.9 percent compared with the fourth quarter.
But that high figure was supported by a severe pullback in new construction. Only 83,000 square feet of new space was added to the 2 billion square feet of existing strip mall space, the smallest amount since Reis began tracking those figures in 1999.
“It really implies more of absence in demand than it does that the market is bottoming,” Calanog said.
Asking rent slipped 0.1 percent to $19.03 per square foot. Factoring in months of free rent and other perks landlords use to lure or keep tenants, rent was $16.55, also down 0.1 percent.
Reis said the vacancy rate could break the 11.1 percent peak set in 1990 if the 14 million square feet of new properties come online in 2011 as they are scheduled to do.
Vacancy fell in 41 of the 80 strip mall markets Reis tracks. Dayton, Ohio, saw the highest strip mall vacancy rate at 17 percent in the first quarter, while San Francisco’s was the lowest at 3.6 percent.
Strip mall owners, such as Equity One Inc EQY.N and Kimco Realty Corp (KIM.N), are scheduled to report their earnings in a few weeks. Meanwhile, Blackstone Group LP (BX.N) has entered the sector with a deal for its Blackstone Real Estate Partners VI LP fund to acquire nearly 600 strip mall centers for $9.4 billion.