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Retail Closures Push Mall Vacancy Rate Up in Second Quarter

July 07, 2017, 08:00 AM
Filed Under: Retail

The vacancy rate for regional malls was 8.1% in Q2 2017, up from 7.9% in Q1, and up from 7.9% in Q2 2016, according to recent data from Reis. While vacancy rates appear to be climbing, they are down from a cycle peak of 9.4% in Q3 2011.

For Neighborhood and Community malls (strip malls), the vacancy rate was 10.0% in Q2, up from 9.9% in Q1, and up from 9.8% in Q2 2016. For strip malls, the vacancy rate peaked at 11.1% in Q3 2011.

Overall the Retail Vacancy Rate, as calculated by Reis, increased 0.1% in the second quarter to 10.0%. Asking rents increased 0.4% in the quarter that saw new stores opening on par with the number that closed. The Mall Vacancy Rate increased 0.2% to 8.1%. Mall Rents also increased 0.4%.

"Defying the doom and gloom aired in media reports, the retail real estate market posted positive net absorption in the second quarter," commented Reis Economist Barbara Byrne Denham. "The vacancy rate increased a bit due to new construction that was only partially absorbed by new leasing. Still, the vacancy rate increase from 9.9% to 10.0% was smaller than most expected.

The increase in the Mall vacancy rate was due to confirmed closings of Macy’s stores.

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