Vacancies Up At Strip Malls, Regional Malls
Because of this blog and other projects I am working on— I don’t get out much these days. But when I do manage to escape the cage, I’ve noticed more and more empty storefronts in business districts, strip malls, and regional malls around the Chicagoland area. It’s not like I specifically look for them either. Even my father noticed it as we drove back from breakfast this morning. “Look at all those empty stores,” he remarked, as we drove through the downtown area of one of the western suburbs.
So I wasn’t too surprised when I came across a piece by Illaina Jonas of Reuters UK, which said the second quarter was the worst quarter for strip malls in 28 years due to store closings and cutbacks. Using data provided by real estate research firm Reis, Jonas wrote this past Monday:
Strip malls, which are usually anchored by grocery or drug stores, saw average vacancies spike 0.5 percentage points to 8.2 percent, a level unseen since 1995, according to the report released on Monday…
For the first time since 1980, more space became available to rent at strip malls than was rented out – about 3.2 million square feet more. Part of the available space came in the form of 5.7 million square feet of new development that came on the market during the quarter.
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Jonas talked about the sources of the strip mall woes. She wrote:
A growing list of retailers shuttered stores ahead of lease expirations or chose not to renew leases, and as newly completed space hit the market without signed tenants…
Consumers are constrained by increases in food and energy costs, as well as the cost of servicing debt run up during the housing boom. In addition to cutting back on clothing, jewelry and nonessentials, they have turned to lower-price grocers such as Wal-Mart at the expense of the upper end usually found at strip malls, such as Whole Foods Market Inc., Reis said.
It’s not just the strip malls that are hurting. The Reuters reporter noted:
Vacancies at regional malls rose 0.4 percentage points to 6.3 percent, the highest level since the first quarter of 2002, according to the preliminary results.
The result of growing vacancies, Jonas said, was downward pressure on rents charged by landlords.
Not a good time to be a mall tycoon…
Source:
“US retail property 2nd-qtr worst in 30 yrs - Report”
Ilaina Jonas
Reuters (UK), July 7, 2008
July 10th, 2008 at 10:20 am
Look in the mirror. Have YOU cut back on your shopping due to the recent spike in prices? Given the awareness shown in your blog, perhaps you are already a prudent spender.
We have no qualms about shopping at the thrift stores, or garage/rummage sales, for necessary items. And our garden provides not only a nearly free supply of high-quality food (seeds, soil amendments & fertilizer have to be bought), but exercise and free entertainment as well, not to mention keeping us close to home (so we aren’t out spending money). A once-a week visit to the grocery store for milk, eggs, etc. is plenty for us.
We have no need for most of the items that are for sale in strip malls and other retail outlets. And as a matter of fact, since we are so disgusted with the direction this country seems to be going in, in a way we feel that refusing to participate in this consumer-driven economy is a way of ‘putting our money where our mouth is’ and making a political statement.
Having said that, we do indeed feel sorry for the small business people who are having to close their retail businesses. But on the other hand - not only is it not our obligation to support them, but isn’t this what a free-market economy is all about? These same small business people made the choice to sell what they do, and they also have the choice to attempt another business venue in something which the buying public finds useful.
BTW, we sell some of the excess produce from our garden, which generates a very small income stream. And what with today’s high grocery prices we may “grow” (pardon the pun) this business, as many people these days are interested in what we are selling,
-Mammoth
July 12th, 2008 at 12:01 am
Thanks for the comment Mammoth. I was a coupon-clipper long before it became popular again. A few years ago I even bought an extra-extra large pizza that was so big, I actually had problems getting it into my car (honest!). The only reason I bought it in the first place was because it was so cheap with a coupon. Fed me for weeks!
Glad to hear you may be “growing” (pun intended) the business too…
July 12th, 2008 at 4:38 pm
Cutting back is only part of the story.
Afflect customers have little incentive to brave the (unwashed) masses and go to stores. Online orders have probably risen in promortion to strip malls dying a thousand deaths.
Bricks and mortar stores are for poor people. Have you been to a store lately and looked around? It’s not pretty. Even worse, the Baby Boomers raised their kids like animals, so the veneer of politeness you used to get with customer service is gone. Now you have to deal with kids with names like Sunshine and Scout who are picking the scabs out of their piercings and doing a Ted Bundy on the English language.
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July 14th, 2008 at 12:28 am
Thanks for the comment Days of Broken Arrows.
“Woodstock was the end of America, really. Except for Creedence; they were great.”
Days, I’m beginning to think you are a big CCR fan (just kidding). Try this post, “Bad Moon Rising,” on for size. It talks about how the Financial Report of the United States Government for the 2007 budget year revealed Washington is promising $45 trillion more than it can deliver on Social Security, Medicare, and other benefit programs.