U.S. shopping-center occupancies rose to a three-year high in the first quarter, enabling landlords to raise rents as less space was added to the market, Reis Inc. said.
Vacancies at neighborhood and community shopping centers fell to 10.6 percent from 10.9 percent, and effective rents, or what’s paid after any landlord discounts, rose to $16.63 a square foot from $16.51 a year earlier, the property-research firm said in a report today. Rents and occupancies were last higher in 2009, according to New York-based Reis.
“It’s a slow but consistent recovery,” Ryan Severino, a Reis senior economist, said in a telephone interview. “There’s nothing being built, so as long as there’s any semblance of demand, it’s pushing vacancies down slightly and rents up slightly.”
Retail landlords are benefiting from a slowly improving labor market and little competition from new shopping centers. The jobless rate dropped to 7.7 percent in February, the lowest since December 2008, from 7.9 percent the previous month, the Labor Department said. In the first quarter, 873,000 square feet (81,000 square meters) of new shopping centers became available, down 57 percent from a year earlier, according to Reis.
Occupied shopping-center space rose by a net 2.73 million square feet in the third quarter, compared with 2.68 million square feet in the previous three months and 3.51 million square feet a year earlier, Reis said.
Until the U.S. employment recovery becomes more vigorous, “retail sales will remain listless” and shopping-center “vacancy compression will be slow and tedious,” Reis said in the report.
At regional malls, which typically include department stores and are larger than neighborhood and community shopping centers, vacancies fell to 8.3 percent in the first quarter from 9 percent a year earlier, and rents rose to $39.46 a square foot from $39, Reis said.