|From Chain Store Age Magazine
Local Shopping Center Vacancy Rate Rises
|New York City – April 11, 2007
|The vacancy rate at strip malls and shopping centers anchored by supermarkets or drug stores has risen to the highest level since 2004, a sign retailers may expect a slowdown in consumer spending, according to a real estate research report cited by Reuters. The first-quarter vacancy rate for the local centers rose 0.10% points to 7.2%, according to a report released by research firm Reis Inc. on Wednesday.
“Consumer spending has remained strong, but there is some expectation that the pace of consumer spending growth will slow in the coming quarters,” said Sam Chandan, Reis chief economist.
It was the third straight quarter that vacancy rose 0.10% points, Reis said.
Rent rose 0.9% in the first quarter. Yet, in spite of the increases, landlords were unable to reduce concessions—rent breaks, or work done—offered to new tenants. In fact, concession levels have been flat or increasing since the second quarter 2004, Reis said.
On the supply side, 5.5 million sq. ft. of new space was completed in the quarter, the lowest level since the first quarter 2004, Reis said. The rise in the vacancy rate, in spite of modest completions, reflects weaker demand for retail space, the report said.
Retailers leased 4.5 million sq. ft. more than they relinquished, just slightly ahead of the fourth quarter 2006, the lowest level of absorption of space since the first quarter 2004.
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