Retail Property Market Held Steady in First Quarter
April 04 2017 - 12:07PM
Dow Jones News
By Esther Fung
Despite a wave of retail store closings and mall vacancies
across the U.S., the national retail-property market is holding
steady.
Vacancy rates in shopping centers increased in 28 of 77 U.S.
metro areas in the first quarter from the same period a year
earlier, according to data from real estate researcher Reis Inc.
That was a slight improvement from the fourth quarter, when 30
metro areas recorded year-over-year increases.
For regional malls, which typically are enclosed retail centers,
vacancy rates rose slightly, to 7.9% in the first quarter from 7.8%
in the fourth quarter of 2016. Asking rents increased 0.4% in the
first quarter, matching the fourth quarter of 2016.
"The overall retail real estate statistics recorded very little
change in the quarter," said Barbara Denham, an economist at
Reis.
The vacancy rate of neighborhood and open-air shopping centers
remained unchanged at 9.9%, the same as the fourth quarter and the
first quarter of 2016.
Many retailers and department stores have been battered in
recent years by the rise of e-commerce and changing shopping
preferences, and have been forced to close stores. Shares of mall
real-estate investment trusts have also taken a beating since early
2016.
J.C. Penney Co. recently said it would close 138 stores, while
Sears Holdings Corp. in early January said it would close an
additional 150 stores. Macy's Inc. said it would shut 63 stores
this spring as part of a broader plan announced last August to
close 100, or 15%, of its stores.
But tenant demand is likely to soften. "Most retailers are
focusing capital investments on the e-commerce rat race,
desperately trying to capture market share. This has left physical
retail -- the core to most mature retail businesses -- neglected
for some time," said D.J. Busch, an analyst at Green Street
Advisors, a real-estate research firm.
Mr. Busch added that the struggles faced by department stores
likely will continue and anchor store closures could cause
headaches even for centers that have strong prospects to fill the
empty spaces.
Write to Esther Fung at esther.fung@wsj.com
(END) Dow Jones Newswires
April 04, 2017 11:52 ET (15:52 GMT)
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