Business Trends

National Shopping Center Review, by Cassidy Turley

File Type: Free Content, Article
Release Date: April 2014
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shopping center in Canada

According to Cassidy Turley’s “National Retail Review: Spring 2014,” prepared by Research Director Garrick Brown and Chief Economist Kevin Thorpe, national credit retailers are driving demand for shopping center space; Class A malls are doing well while other malls are struggling; and retail occupancy is beginning to improve beyond primary markets. The firm tracks shopping center vacancy, absorption and rental rate trends in 60 major United States markets. At the end of 2013, shopping center vacancies in those markets stood at 8.6 percent, down from 9.5 percent a year earlier. “For many metros in the nation’s heartland,” the report comments, “the past year was the strongest year in terms of occupancy growth recorded since the economic downturn.”

“Power centers may be the surprise story of the year,” the report notes, adding that power center landlords have adapted to the shift from big box stores to smaller ones: “They’ve spent the money to demise larger box space (40,000 square feet and up) … to create junior boxes (under 40,000 square feet) where there is a solid pipeline of expanding retailers,” particularly smaller grocery stores.

The mall world is “increasingly becoming divided between the haves and have-nots,” with Class A mall vacancies close to 2 percent and those for Class C malls nearing 10 percent. Class B mall landlords face “incredible pressure … to upgrade and compete with Class A or risk falling into the dreaded C category.”

Markets experiencing the strongest levels of new development include Chicago, Houston and Dallas, all of which saw more than 1 million square feet of shopping center space delivered in 2013.  San Francisco, Hawaii and Pittsburgh had the lowest vacancies (2.6, 3, and 4.6 percent, respectively), while Reno, Nev., Memphis, Tenn., and Cleveland had the highest (14.8, 13.4 and 12.7 percent).