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Shopping centers put on a strong performance last year, according to numbers just released by ICSC Research.
Net operating income at U.S. shopping centers grew in 2018, closing the year at a record high, says ICSC Research, which used NCREIF data. Shopping center NOI grew by 2.8 percent in the fourth quarter — the biggest increase since the third quarter of 2016 — bringing NOI for the year to $19.36 per square foot, a 1.4 percent increase over 2017.
Total operating income at all U.S. shopping centers rose by 2 percent from the previous year, while operating expenses grew by 3 percent.
NOI at open-air centers reached $4.15 per square foot in the fourth quarter, a 1.9 percent increase from the 2017 comparable quarter. For full-year 2018, open-air NOI hit $16.62 per square foot, 1.6 percent higher than in 2017. Base rents in this industry sector rose by 1.9 percent last year, to $18.04 per square foot. It helped that occupancy rates at open-air centers remained stable, at 93.1 percent.
The mall sector turned in a strong fourth-quarter performance too, after a weak third quarter, with base rents rising by 6.9 percent over fourth-quarter 2017 and NOI rising by 4.9 percent. For the year, mall rents reached $29.07 per square foot (2.5 percent higher than in 2017), while NOI exceeded $32.46 per square foot (1.1 percent more than the previous year). Occupancy was at 91 percent, down slightly from 93.5 percent in 2017.
By Edmund Mander
Director, Editor-In-Chief/SCT