Strip Mall Vacancies Down, Showing Promise

Strip malls have become big business in America, but they’ve taken a beating during the recession. Reports now for those running a small business are looking up. The national vacancy rate dropped to 10.5% last quarter from 10.6% during the previous period, as real estate research firm Reis Inc. reports.  Interestingly the drop in the vacancy rate is mostly a result of the lack of new construction. As Ryan Severino, a senior economist at Reis, said, “People look at the market and say: ‘These buildings are sitting 10 percent vacant or so, why are we going to build something new?'”

Retailers are in possession of 2.453 million square feet of US strip centers. This is slightly down from their first quarter possession of 2.959 million square feet. The asking rent at the end of this quarter was $19.19 per square foot per year.

There is a large range in the classification of strip malls, as anyone running a small business can explain. Regional malls, for instance, are considered those that have department stores on book-ends with specialty stores in the middle. These malls saw a flat rate that stands at 8.3% vacancy in the second quarter.

Not surprisingly, top-tier malls in the wealthier areas are showing the most improvement, as they tend to house the most successful small businesses. The top nine markets with the lowest vacancy rates include California, New York and others. As Severino said, “There’s a pretty big rift in the high-end centers that cater to the affluent and the other centers that cater to everyone else. The wealthy are not immune to the economy, but they’re definitely more insulated.”