U.S. shopping centers turned in a strong performance in 2018 in terms of occupancy, rents and sales, and this is likely to continue as the economy keeps growing this year, according to a Cushman & Wakefield report on the open-air sector.
Vacancy rates at open-air centers dropped to 6.3 percent at year-end, from 6.7 percent at the close of 2017, with robust growth in the categories of dollar stores, discount grocery, off-price apparel, fitness and beauty, and cosmetics, according to the firm's MarketBeat report. The report provides a market-by-market breakdown of occupancy, absorption, inventory and asking rents across the U.S.
Nearly 6.2 million square feet of open-air center space was absorbed in the fourth quarter, bringing the year-to-date total to 24.9 million square feet. The pace of absorption is slowing, however: Annual absorption has averaged 41.1 million square feet in each of the previous five years, the report says.
Open-air center occupancy was helped by robust growth in the categories of dollar stores, discount grocery, off-price apparel, fitness and beauty, and cosmetics
Developers have helped strengthen occupancy by tailoring construction to demand, Cushman & Wakefield notes. In total, some 18.2 million square feet was added to the shopping center inventory last year — half of which was in the neighborhood/community segment — and only 14.4 million square feet of shopping center space was under construction by the end of 2018.
“Several projects currently under way are focused on redevelopment and mixed-use projects, as will continue to be the case for future development activity,” the report notes.
Vacancy rates at neighborhood and community centers dropped to 6.9 percent at the close of last year, the first time it has dipped below 7 percent in at least 11 years, Cushman & Wakefield says. Power centers also performed well, absorbing nearly 408,000 square feet in the fourth quarter, bringing the total to 1.8 million square feet for the year.
By Edmund Mander
Director, Editor-In-Chief/SCT
