JLL found that mall rents in Q2 dropped 4.6 percent from the first quarter and 7.1 percent from one year prior. But, in terms of bringing in tenants, some malls fared better than others, Chain Store Age reported.
“[Malls] with strong locations were able to nab high-productivity tenants like Whole Foods, Wegmans and Nordstrom,” according to JLL’s Q2 Retail Outlook report. “Those in fairly good locations were leased by tenants like Dick’s, Belk and At Home. Those with only an average location had a harder time finding a replacement tenant, and when they did, it was usually a lower-performing, non-retail tenant.”
In terms of tenants leaving malls, move-outs reached 7.8 million square feet in the second quarter. And, of those moveouts, 4.8 million square feet were in “low- to mid-rated malls.” However, malls with CoStar 5-star ratings represented under 100,000 square feet of move-outs.
The vacancy rate at malls around the country hit 8.6 percent in the second quarter, marking the highest level since back in 2012, when the U.S. was crawling out of the last recession. According to a report in The Wall Street Journal, the vacancy rate stood at 8.4 percent in Q1.
The impact of eCommerce had been particularly damaging for strip malls and community shopping centers, with The Journal reporting that around 3.8 million square feet of space was emptied from April to June, which increased the vacancy rate to 10.2 percent.
At the same time, vacancies are being impacted by the move on the part of big-name retailers to reduce their store numbers during the past few years. The Journal pointed to Bon-Ton, Sears and J. C. Penney as a few retailers that have been shuttering stores and decreasing their physical footprint. Meanwhile, Toys R Us closed its stores earlier this year after failing to survive a restructuring. It had close to 800 stores around the U.S.