by Dan Rafter
Higher rents and fewer empty spaces, that’s what the owners of shopping centers across the United States are enjoying today.
Cushman & Wakefield’s first-quarter U.S. Shopping Center Snapshot shows that while shopping centers across the country aren’t exactly enjoying boom times, they are at least holding steady in their ability to attract consumers who continue to grow more confident in the economy.
According to the report, the vacancy rate for U.S. shopping centers stood at 7.9 percent at the end of the first quarter. That’s down from 8.3 percent at the end of the first quarter of 2015, and marks the 16th consecutive quarter in which overall shopping center vacancy rates remained either steady or fell.
Shopping centers saw total occupancy growth of just under 4.8 million square of space in the quarter. Cushman & Wakefield said that this was the smallest jump in occupancy in a quarter in four years. However, there is even good news in that: The stable vacancy rate of U.S. shopping centers came in a quarter in which retailers closed the most stores since 2010, according to Cushman & Wakefield.
Cushman said that the first quarter of the year is known as “store closure season” among the owners of shopping centers. It’s a time when many retail chains close locations that aren’t performing. In the first quarter of this year, Walmart tweaked its superstore concept and basically scrapped its small-format efforts. Cushman reported that Walmart closed about 125 of its Neighborhood and Express stores during the quarter.
Also in the fourth quarter, Macy’s closed 40 of its full-line department stores. American Eagle, Aeropostale, Kohl’s and Stage Stores all shuttered underperforming locations during the quarter, Cushman & Wakefield said.
The shopping center market has also been hit with a growing number of bankruptcies, according to Cushman & Wakefield. In January, Joyce Leslie, which operates 47 stores across the country, announced its bankruptcy, while Hancock Fabrics, with its 185 stores, announced its bankruptcy filing in February. Sports Authority, with 140 stores, also filed in February. In March, Ovation Brands, the parent company of Hometown Buffet, filed for bankruptcy. This chain closed 78 restaurants in February. It’s not clear yet what will happen to Ovation’s remaining 328 locations.
Cushman & Wakefield predicted more changes for retailers throughout 2016. Much of this will occur as retailers focus more on online efforts and shutter brick-and-mortar locations that they no longer need. This is reflected in lower new-construction numbers. Cushman & Wakefield reported that there was 21.5 million square feet of new shopping center space under construction in the first quarter of 2016. That’s down from 25.8 million square feet during the first quarter of 2015.