Azalea Mall Directory Without a Mall, 12 August 2010. This is a sad place. The Azalea Mall in north Richmond opened in 1963 and closed in 1995. All that is left is the empty space and the sign. Michael Letour via flickr.com

By Ilaina Jonas
7 October 2011 NEW YORK (Reuters) – The average vacancy rate for large U.S. shopping malls reached its highest level in 11 years in the third quarter, as department store closings took effect and retailers scaled back their floor space due to shaky consumer sentiment, according to a report issued on Friday. Preliminary figures by real estate research firm Reis Inc show the average vacancy rate at regional malls rose to 9.4 percent in the third quarter, the highest level since Reis began tracking regional mall vacancy rates in 2000 and up from 9.3 percent in the second quarter. Asking rent rose 0.1 percent from the prior quarter to $38.81 but remained close to 2006 levels. Reis does not provide rent net of perks such as months of free rent, a figure known as effective rent for large regional malls. Unlike the office, apartment or hotel sectors, which have been staging a recovery in various phases, retail real estate continued to struggle in the third quarter. Weak consumer sentiment, which had prompted retail tenants to scale back or close stores over the past two years, remained insufficient for store operators to mount a comeback, Reis said. The summer’s political gridlock in Washington and resultant downgrade of U.S. debt shook consumers and depressed their shopping habits, Reis added. That compounded the oversupply of U.S. strip malls during the quarter, when 17,000 more vacant square feet became available than were rented. The vacancy rate at these local retail strips was 11 percent, flat with the second quarter, Reis said. The vacancy rate remained flat in 55 of the 80 metropolitan areas Reis follows. Effective rents were flat or fell in 52 markets. “With demand remaining so weak and more new completions anticipated to come online in the remainder of 2011, there is still a good chance that the vacancy rate will match the 11.1 percent record high observed in 1990 sometime later this year,” Reis senior economist Ryan Severino said. […]

U.S. mall Q3 vacancy rate at 11-year high –report