U.S. shopping centers had a net gain in occupancies in the first quarter amid a slow economic recovery, according to property-research company Reis Inc.
Occupied space rose by a net 2.96 million square feet (275,100 square meters), the second-largest increase since neighborhood and community retail centers began losing tenants in the first quarter of 2008, New York-based Reis said in a report today. So-called absorption was up from 717,000 square feet a year earlier.
“The first quarter produced more evidence in favor of a slow recovery,” Ryan Severino, a Reis senior economist, said in the report. “We remain cautious about pronouncing a turnaround until we observe a couple more quarters of improvement.”
Retail landlords are benefiting as consumers spend more amid improving employment. U.S. chain-store sales last month rose 4.1 percent from a year earlier, the International Council of Shopping Centers said. The jobless rate was 8.3 percent in February, the latest period for which Bureau of Labor Statistics figures are available and the fifth straight month it was less than 9 percent.
Shopping-center vacancies stood at 10.9 percent in the first quarter, unchanged from a year earlier and down from 11 percent in the last three months of 2011, according to Reis. It was the first decline in vacancies from a prior quarter since the second quarter of 2005.
Effective rents, or what’s paid after any landlord discounts, averaged $16.57 a square foot, little changed from $16.55 a year earlier and $16.56 in the fourth quarter. Rents remain close to late-2005 levels, Reis said.
At regional malls, which typically include department stores and are larger than neighborhood and community shopping centers, vacancies fell to 9 percent in the first quarter from 9.1 percent a year earlier. Rents rose to $39 a square foot from $38.75.
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