Shopping Center Report: Here Are 5 Takeaways From Q4
Some reports say it's dying. Others say it's thriving. To gain some empirical intel, we dug through Cushman & Wakefield's Q4 ’15 US Shopping Center Snapshot report, an in-depth look at the US shopping center sector, to get real lowdown on the industry. Here are five of the biggest takeaways.
1. Lowest Vacancy In Six Years
Since its 2010 peak, shopping center vacancy has dropped in 20 of the past 23 quarters, despite the current environment of retail struggles. This is great news for the real estate in those shopping centers, as rental rates have climbed to nearly $25 per SF, up from under $21 per SF in 2010.
2. The Barbell of Prosperity
According to the report, luxury and discount have created a "barbell of prosperity." (Example: dollar-store chains have exploded, growing to the tune of one new store every 4.5 hours since 2010.) In the middle of the bar, mid-tier retailers like Macy's and Sears struggle, while new discount brands (Macy's Backstage, Nordstrom Rack) take their place instead.
3. The Impact Of E-Commerce
The online vs. brick-and-mortar saga continues, as e-commerce's lower-cost goods are pulling the rug out from mid-tier retailers. The e-commerce boom could slow growth in the white-hot restaurant market as well, presumably as consumers do more shopping from home.
4. More Store Closures On The Horizon
According to the report, Q1's normal store closures will be bolstered in 2016 by retailers slimming down their brick-and-mortar footprint to fit the new e-commerce-heavy retail environment. High-profile mergers and acquisitions could also mean closures over the year.
5. Have And Have-Not Retail Marketplace
C&W is seeing expansion of Class-A tenants, while Class-B and Class-C tenants go by the wayside, as the market increasingly gets "split in two," the report says. While "dead malls"—as the report calls them—abound, high-end shopping centers are thriving. Demand will continue for high-end stores, while Class-B and C will get little relief and "the gulf between the retail 'haves' and 'have-nots' will continue to widen."