The national retail-property market is showing signs of a slowdown after years of steady growth, according to a report set to be released Friday, as cities and towns across the U.S. grapple with a growing number of empty storefronts.
Vacancy rates in community shopping centers increased in 30 of 77 U.S. metro areas last year, compared with 24 in 2015 and 19 in 2014, according to data from real estate researcher Reis Inc.
Store closings affect properties in different ways, analysts noted, with stronger malls allowing owners to lease the space to higher-paying tenants even as weaker malls face extended vacancies.
Mall landlord CBL & Associates, which has four Macy’s store closures planned in its portfolio, said it is in negotiations for a new anchor store to replace Macy’s at its Layton Hills Mall in Utah and will purchase the remaining three locations from Macy’s.
Other potential users for the space vacated by Macy’s include sporting-goods stores, fitness centers, off-price retailers, restaurants, theaters and entertainment vendors, said CBL.
Lower-quality malls might have less pricing power when it comes to signing new leases, said Edward Dittmer, vice president at Morningstar Credit Ratings. “The smaller malls, weaker players are going to have trouble filling those vacancies,” he said.
Source: The Wall Street Journal, Vacancy Rates Rise at Shopping Centers - Esther Fung.