According to Reis Inc., a New York real-estate research firm, 10.3% of the retail space at U.S. shopping centers -- open-air centers typically anchored by a grocery store or big-box retailer -- was vacant in the third quarter. That was up from 8.4% in the same period a year earlier and was the highest vacancy rate since 1992. At enclosed malls, the vacancy rate rose two percentage points to 8.6%, the highest rate since Reis began tracking mall data in 2000, according to The Wall Street Journal. The hardest-hit retail properties were those completed this year with 30% opened half-empty or worse, according to the data.
Mall and shopping-center owners are reeling from two years of flat to declining retail sales and waves of store closures. Many are still trying to find tenants to fill hundreds of vacancies created by the closures last year and early this year of chains including Linens 'n Things Inc., Circuit City Stores Inc. and Gottschalks Inc. Meanwhile, the closures continue to mount, with chains such as Blockbuster Inc., Hollywood Entertainment Corp.'s Game Crazy, Zale Corp. and AnnTaylor Stores Corp. cumulatively closing more than 1,000 stores.
The Federal Reserve has tallied nearly 8,300 store closings announced by retailers so far this year, including more than 1,500 large anchor stores. Last year, the International Council of Shopping Centers, an industry trade association, counted 6,900 such announced closures. The next-highest annual total recorded by the trade association was 7,000 in 2001.
As demand for retail space plummeted, average retail lease rates continued to decline in the third quarter, down 3.7% to $16.89 per square foot for shopping centers and off 3.5% to $39.18 for malls. And the outlook for a recovery in the near future appears bleak. "We don't see rent levels in retail returning to 2008 levels until 2016," said Victor Calanog, Reis director of research, told the WSJ.
