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Home / Business / Moody’s claims that the vacancy rate of U.S. shopping malls has jumped at the fastest rate ever

Moody’s claims that the vacancy rate of U.S. shopping malls has jumped at the fastest rate ever



On February 3, 2021, shoppers walk past an almost empty Palisades Center Mall retail center in New Nyack.

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If you have recently noticed that the windows of the shopping mall are getting darker and the shops are empty, then you are not alone.

According to data from the commercial real estate department of Moody̵

7;s Analytics, the vacancy rate of regional shopping malls in the United States has reached a record 11.4% in the first quarter of 2021 from 10.5% in the fourth quarter of 2020.

The 90 basis point growth marked the company’s highest ever record, surpassing the record peak of 80 basis points in the first quarter of 2009, during the Great Depression.

Victor Calanog, the head of Moody’s Commercial Real Estate Economics Department, said: “Malls are absolutely still in danger.” “Even before Covid, they were in danger…. Now say it. Our shopping mall vacancy rate has reached a record level and has almost passed because we have been breaking this record.”

According to data from Green Street, a commercial real estate services company, there are approximately 1,000 shopping malls in the United States. Moody’s tracked around 700 of them for analysis.

Over the years, the flow of shoppers to many closed shopping centers (usually located in the suburbs) has steadily declined, while Americans spend more online. The global health crisis has only accelerated this pattern. Many retailers in shopping malls, including department stores, are struggling to keep in touch with customers. Last year, several shopping mall companies (including JC Penney, Neiman Marcus, Lord & Taylor, Brooks Brothers and J.Crew) filed for bankruptcy protection.

In its latest quarterly report, Moody’s found that although other commercial real estate sectors (such as multi-family apartments) have made better progress, the retail industry is still under the greatest pressure.

Industrial real estate has always been the most resilient type of real estate, and demand for warehouses for storing goods and fulfilling e-commerce orders has surged. Karanog said that so far, during the pandemic, rents for warehouses and distribution properties across the country have not turned negative.

Like the retail industry, office space continues to experience rising vacancy rates and declining rents. Many companies are still struggling to cope with the future state of the workspace. The company is considering eliminating their office footprint and allowing employees to work at home at least part of the time.

In the first quarter, office rents in 48 of the 79 US metropolitan areas tracked by Moody’s decreased effectively. The hardest-hit area was Charleston, South Carolina, which fell 3.5% from the previous month. New York fell 1.8%; and San Francisco, fell 1.6%.

Moody’s found that in the retail industry, 40 of the 77 cities where effective rents fell in the first quarter. The company pointed out that here, retail only represents communities and community shopping centers, not indoor shopping centers.

The vacancy rate of these retail properties (also excluding shopping centers) was 10.6% in the most recent period, slightly higher than the 10.5% in the fourth quarter.

Karanog said of the retail industry: “This is a constant balance between store closures and openings.” “We hope to be fair, some companies are opening stores…. But now we are losing space. This is the data. Reflected.”

Today, the growth of retail stores is mainly concentrated in the area of ​​price cuts and discounts. Dollar General, Lidl, TJ Maxx, Burlington and Five Three are planning to expand and expand. Beauty companies Ulta and Sephora are still opening stores, and it is expected that popular physical stores will rebound after the pandemic.

However, this growth is not always sufficient to offset the recession in other regions.

In another report released this week, UBS (UBS) predicted under a basic situation that in the next five years, approximately 80,000 retail stores across the country will be closed, affecting approximately 9% of retail stores. UBS said that clothing, sporting goods and office supply stores are expected to cause a large number of closures.

By the end of 2020, it has a total of 115,000 shopping centers in the United States (including shopping centers, shopping centers, outlets and other lifestyle centers), compared with 112,000 in 2010 and 90,000 in 2000.

— CNBC Nate Ratner Contributed to data visualization.


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