Shopping center owners will need creativity to attract tenants, shoppers
With the ongoing upheaval in the retail sector, landlords of regional malls have been getting creative; will strip mall owners be able to do so as well?
Overall vacancies at U.S. shopping centers have hit the highest level in eight years. Reis reported the vacancy rate for regional malls was 9.3 percent during first quarter 2019, unchanged from 9.3 percent in first quarter 2018, and up from 8.6 percent in the second quarter 2018. This is down slightly from a cycle peak of 9.4 percent during the third quarter 2011, and up from the cycle low of 7.8 percent in first quarter 2016. And the return for institutional investors in retail properties, as measured by the NCREIF Property Index, turned negative during the quarter. The retail total return was –0.11 percent.
With vacancies not improving, landlords have gotten creative. Reis said, on the supply side, empty big-box stores have been converting to self-storage or been sold to developers for redevelopment; former shoppin