Strip Mall Market Slow to Recover
October 7, 2013
Empty strip malls still plague U.S. shopping centers, as the commercial sector continues to struggle with oversupply from last decade’s housing boom, according to a report from Reis Inc., a real estate research firm.
"Retail is incredibly sticky," says Victor Calanog, Reis’ chief economist. "I don't know what you do with these retail centers. As long as you’re pulling in some money from existing tenants, a lot of them limp along."
These shopping centers—which are usually anchored by supermarkets and large drug stores—are continuing to confront competition from online shopping and struggling to find ways to co-exist.
The national vacancy for strip malls stood unchanged at 10.5 percent in the third quarter compared to the second quarter. It was down 0.3 percentage points from a year earlier, according to Reis figures. The vacancy rate was only 0.6 percentage points off the peak rate of 11.1 percent that was reached two years ago.
Developers have been shy about building, too. New space being added to the strip mall supply so far this year is only 3.6 million square feet—on track to set a 32-year record low that had been originally set in 2010 with 4.5 million square feet of new space, Reis says.
Still, asking rents were on the rise, edging up 0.3 percent to $19.25 per square foot, according to Reis.
Source: “U.S. Still has too Many Strip Malls: Report,” Reuters (Oct. 2, 2013)
Updated: November 23, 2020