(Reuters) - U.S. retail mall vacancies fell 10 basis points in the third quarter from the second as high-end regional malls helped offset slower growth in smaller retail spaces like community centers, according to real estate research firm Reis Inc.
Retail mall vacancies fell to 7.8 percent from 7.9 percent, the firm said in a report on Tuesday.
Asking and effective rents for shopping centers rose for a third straight quarter, while rent growth rate was unchanged from the second quarter at 0.4 percent, Reis said.
“We continue to expect vacancy rates for neighborhood and community centers to slowly drift lower and rent growth to increase at a slightly faster rate,” Barbara Denham, senior economist at Reis, said.
The national vacancy rate for neighborhood and community shopping centers rose to 10 percent, up 10 basis points from the second quarter.
Construction activity accelerated with 2.53 million square feet of new neighborhood and community center space completed during the third quarter, the highest level of completions in the past four quarters.
Net absorption, which is measured in terms of available retail space sold in the market during a certain time period, plummeted over 96 percent from the second quarter to a paltry 143,000 square feet.
Denham said the fall in net absorption was a “troubling finding” and attributed the reduction to “a delayed response to tepid economic conditions in the first quarter.”
“With job growth and gains in median family income across the U.S., the retail recovery should continue,” Denham added.
Reporting by Shashwat Awasthi in Bengaluru