Some geographies are coping with the upheaval in retail better than others, as vacancies in U.S. shopping malls reach an eight-year high. Reis data indicates that the proportion of units sitting empty in some cities – with the inclusion of Birmingham, Alabama and Indianapolis, Indiana – is roughly four times higher than San Francisco, the Financial Times reported.
The Reis data monitors 77 metro areas and indicates that 9.4 percent of units were empty in Q3, “equaling a post-financial crisis high reached in 2011,” according to the report. However, the retail vacancy rate was under 7 percent in 17 cities, with San Francisco taking the lead at 4.1 percent. But 24 cities experienced vacancy rates that exceeded 12 percent, with the inclusion of Buffalo, Memphis and Albuquerque.
Vacancy rates also improved during the past year in 43 cities, including Seattle, Las Vegas and Chicago. But retail vacancies increased by 2.4 percentage points in Syracuse, New York to reach 14 percent during the past year.
There have been indications of trouble in local retail property markets as landlords prepare for store closures after Forever 21’s bankruptcy. Per court documents, the company’s Chief Restructuring Officer Jonathan Goulding said the retailer was “saddled with excessive floor space” in multiple unprofitable markets. They were usually quite big – its stores took up 12.2 million square feet globally – which is reportedly causing concern that mall operators will have difficulty finding tenants as replacements.
GlobalData Retail Managing Director Neil Saunders said, according to the report, “It’s definitely a concern because there [aren’t that many retailers that will want that amount of space.” The report comes as news surfaced last month that Forever 21 plans to close up to 178 stores in the U.S., as well as almost all locations in Europe and Asia.