A shift in consumer shopping patterns toward online marketplaces continues to hit the retail sector and its real estate market hard. The vacancy rate for large U.S. shopping malls rose to 8.4 percent in the first quarter of 2018, the highest since the fourth quarter of 2012, according to new study from real estate data firm Reis Inc. For neighborhood and community shopping centers, Reis found that 41 of the 77 areas they examined saw vacancy increases during the 12 months ending March 31.
In a reversal of normal trends, retailers occupied 453,000 more square feet of shopping center space at the end of the first quarter compared to the fourth quarter of 2017. "The first quarter tends to see the lowest activity," the Reis report said. "However, this was an unusually slow quarter for retail leasing and construction." The amount of absorption was the lowest for any quarter in the last five years.
As the demand for shopping mall space shrinks, some developers are finding new purposes for the large retail complexes, everything from residential use to offices and industrial spaces to parks and playgrounds. The Highland Mall in Austin, Texas, for example, has been converted into a 600,000-square-foot structure for classrooms, lab space, and apartments for Austin Community College students.
Source: “Mall Vacancies Reach Six-Year High as Retail Slump Batters Local Economies,” The Wall Street Journal (April 1, 2018) [Login required.]
