Mall Vacancies Hit 6-Year High; Toys “R” Us Closings Cited

According to data from Reis, mall vacancy rates are at their highest levels since Q3 2011. Data from Q2 2018 shows that 55 metros (71%) saw an increase in vacancy due to net absorption. The neighborhood and community shopping center sector suffered a negative net absorption of 3.8 million square feet, as regional mall vacancy increased to 8.6% in the quarter.

Perhaps the most conspicuous culprit has been the closure of Toys “R” Us, which impacted quarterly statistics more than any retailer in any quarter over the past nine years. More than 80 closures across 40 metros have caused a glaring effect, but experts believe that most of the negative net absorption effects have run their course.

While 25 of the metros posted a decline in rent because of the increased vacancy, rent growth has still remained positive. The average rents have increased by 1.7% ($21.01/ sf – market) and 1.8% ($18.39/sf – effective) YoY. Additionally, retail employment has also increased despite higher vacancy rate, posting positive job growth every month this year.

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