More sour news regarding the economy, this time regarding retail space in strip malls and shopping malls:
Mall vacancies hit their highest level in at least 11 years in the first quarter, new figures from real-estate research company Reis Inc. showed. In the top 80 U.S. markets, the average vacancy rate was 9.1%, up from 8.7%.
The outlook is especially bad for strip malls and other neighborhood shopping centers. Their vacancy rate is expected to top 11.1% later this year, up from 10.9%, Reis predicts. That would be the highest level since 1990.
In 2005, the mall-vacancy rate hit a low of 5.1%. For strip centers the boom-time low vacancy rate was 6.7% that same year.
The article goes on to mention how this problem is particularly acute on the suburban fringe where development was taking place or was predicted to take place.
While strip malls take a beating from those opposed to sprawl and suburban garishness (think James Howard Kunstler – see his TED speech on the topic here), they can be quite important to local economies. From where I live in the suburbs (roughly 25-30 miles west of Chicago), there are numerous strip malls, including a number that I can walk to within fifteen minutes. While most of these businesses are not flashy, they encompass certain consumer needs from car care places to drug stores to restaurants to hardware stores. I have always wondered how businesses thrive in these settings: there is so much competition (why can’t the customer just go to the competition in the strip mall down the street?) and many decry the strip mall (though it would be an interesting debate to see whether people think they are worse than big box stores).