| NEW YORK
NEW YORK Oct 2 The average vacancy rate for a
U.S. strip mall was unchanged in the third quarter, as the
sector still wrestled with the oversupply that closely followed
last decade's housing boom, according to a report real estate
research firm Reis Inc released on Wednesday.
While large malls did not have the same problem with
oversupply, some are better off than others. Some of the best
ones owned by real estate investment trusts such as Simon
Property Group Inc enjoy vacancies rates of about 5
percent. Others limp along with 40 percent of the space vacant.
Even the stronger ones and their retail tenants are still
confronting competition from online shopping and are figuring
out ways to co-exist.
"Retail is incredibly sticky," Reis Chief Economist Victor
Calanog said. "I don't know what you do with these retail
centers. As long as your pulling in some money from existing
tenants, a lot of them limp along."
In the third quarter, the national vacancy for strip malls
was 10.5 percent, unchanged from the second quarter and down 0.3
percentage point from a year earlier, according to preliminary
figures by Reis. But it still was only 0.6 percentage point off
of the peak rate of 11.1 percent seen two years ago, Reis said.
These shopping centers are usually anchored by supermarkets or
large drug stores.
Developers have been loathe to build new centers. So far
this year, only 3.6 million square feet of new space has been
brought to market, on track to break the 32-year record low set
in 2010, when 4.5 million square feet opened, Reis said.
Asking rent at these strip malls inched up 0.3 percent to
$19.25 per square foot. Effective rent, which factors in months
of free rent and other perks landlords offer to keep or attract
tenants, rose 0.4 percent to $16.75 per square foot, up just 1.1
percent year over year.
Meanwhile, permitting restrictions and large costs have
helped keep the supply of new malls much tighter. Still, the
recession, credit crisis, slow recovery have impacted the
In the third quarter, the national vacancy rate dipped to
8.2 percent, down 0.1 percentage point from the third quarter,
down 0.5 percentage point from a year earlier and off from the
cyclical peak vacancy rate of 9.4 percent in the third quarter
Asking rents grew by 0.4 percent in the third quarter and
1.4 percent from a year ago to $39.77 a square foot. It as the
tenth consecutive quarter of rent increases at the national
level for regional malls, Reis said. Reis does not track
effective rent for regional malls.