New York City U.S. store closings and cutbacks turned the second quarter into the worst for strip-mall owners in 30 years, as consumers flocked to low-cost warehouse-style grocery centers, according to the Associated Press, citing a recent report by real estate research firm Reis.
Strip malls saw average vacancies spike 0.5% points to 8.2%, a level unseen since 1995, according to the report released on Monday.
Vacancies at regional malls rose 0.4% points to 6.3%, the highest level since the first quarter of 2002, according to the preliminary results.
"They definitely came up weaker than our expectations and we've been pretty bearish on our outlook for retail for some time," Reis chief economist Sam Chandan said. "In the market in general there have been a lot of store closings."
For the first time since 1980, more space became available for rent at strip malls than was rented out—about 3.2 million sq. ft. more. Part of the available space came in the form of 5.7 million sq. ft. of new development that came on the market during the quarter.
The extra space translated into falling rents at strip malls, down 0.1% to an average of $17.60 per square foot.
Preliminary figures show that regional malls were barely able to raise rents, with just an anemic 0.2% rise excluding concessions, its weakest gain since the second quarter.