Demand for space in U.S. shopping centers slowed in the third quarter as economic growth was reduced by stalled consumer spending, Reis Inc. said today.
Occupancies at neighborhood and community shopping centers rose by a net 1.46 million square feet (135,000 square meters), the smallest quarterly increase in a year, according to the New York-based real estate research firm. The gain in so-called net absorptions compared with an increase of 2.18 million square feet in the previous three months, and was the smallest since 840,000 square feet were added in the third quarter of 2011.
Retail landlords are being hurt by a standstill in consumer spending, which accounts for about 70 percent of the economy. It rose 0.1 percent in August, after adjusting for inflation, following a 0.4 percent gain in July, according to the Commerce Department. U.S. gross domestic product grew 1.3 percent in the second quarter, half the average rate in the past 20 years.
“People aren’t really spending a lot of money unless they have to,” Ryan Severino, a Reis senior economist, said in a telephone interview. “You’re still seeing kind of a tug of war between store openings and store closings right now.”
The vacancy rate at neighborhood and community retail centers was 10.8 percent for a second straight quarter. It was 11 percent in the third quarter of 2011, matching a 12-year high reached at the end of 2010. About 569,000 square feet of new space came online in the three months ended Sept. 30, the second-lowest quarterly figure in Reis records dating to 1999.
Asking rents rose to an average of $19.05 a square foot from $18.97 a year earlier, Reis said. Effective rents, or what’s paid after any landlord discounts, averaged $16.57 a square foot, up from $16.49 a year earlier.
At regional malls, which typically include department stores and are larger than neighborhood and community centers, vacancies fell to 8.7 percent in the third quarter from 9.4 percent a year earlier, and asking rents rose to $39.24 a square foot from $38.81.