Shopping Centers Today

MAR 2017

Shopping Centers Today is the news magazine of the International Council of Shopping Centers (ICSC)

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10 S C T / M A R C H 2 0 1 7 S U P P LY A N D D E M A N D T H E C O M M O N A R E A Center vacancy low despite some store closures By Edmund Mander R estrained development is helping to keep vacancies tight in many U.S. markets, according to Cushman & Wakefield. Overall U.S. shopping center vacancy ended the fourth quarter at 7.3 percent, down from 7.4 percent at the end of the third quarter, the firm reports. The fourth quarter was the third consecutive one in which vacancy has edged down, Cushman & Wakefield says. At year-end 2015, U.S. retail vacancy was at 7.7 percent. Regionally, vacancy levels remained flat over the course of the fourth quarter in the Great Lakes, Great Plains and Northeast regions. Meanwhile, modest decreases were recorded in the Mountain, Pacific, South, Southeast and South Central Texas regions. Boston currently enjoys the nation's lowest shopping center vacancy rate, at just 3.8 percent. Following is Miami (at 3.9 percent), North Carolina's Raleigh- Durham (4.2 percent), Little Rock, Ark. (4.3 percent), and Hawaii and San Francisco (both at 4.5 percent). The highest vacancy levels in the survey are in Mobile, Ala. (at 11.9 percent), Reno, Nev. (11.7 percent), Phoenix (11.2 percent), Chicago (10.7 percent) and Milwaukee (10.4 percent). "Because demand levels have remained fairly tepid, this has not fourth quarter of 2016: Some 6.6 million square feet of new shopping center space was delivered, 5.5 million square feet of which was occupied upon completion. The Northeast (1.6 million square feet), Southeast (1.2 million square feet) and South Central Texas (1.1 million square feet) regions led the way. Over the past 12 months, a total of 25 million square feet of new space was delivered, off from 27.5 million square feet in 2015. Cushman & Wakefield is currently tracking 22.1 million square feet of new shopping center space under construction — down from the nearly 27 million square feet that was in the development pipeline a year ago. The firm expects this number to continue to decline over the course of 2017. n 2% 12% 15% A V A I L A B I L I T Y B Y T Y P E % OF TOTAL SPACE AVAILABLE IN THE US * neighborhood and community strip center power and regional mall lifestyle 69% Source: CoStar; Cushman & Wakefield Research been enough to spur speculative development," said Garrick Brown, Cushman & Wakefield's vice president of retail research for the Americas. "In fact, speculative shopping center development has been a rarity since the Great Recession, with virtually no major new projects moving forward without at least anchor tenant commitments in place." Since 2010 Cushman & Wakefield has tracked 159.3 million square feet of new shopping center deliveries in the U.S. (an average of 5.7 million square feet per quarter); roughly 80 percent of that space was occupied upon delivery. "Typical lease-up times for new projects have ranged between six and 18 months," said Brown. This trend played out again in the *Figures are rounded.

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