U.S. shopping center occupancy rate hit six-year high
New York -- The death of the mall has been highly exaggerated, according to data released Monday by the International Council of Shopping Centers and the National Council of Real Estate Investment Fiduciaries. Among the highlights: Shopping center occupancy rates were 92.7% at the end of 2014, the highest level since second quarter 2008, according to data released Monday. Occupancy was even higher for the mall segment (combined super-regional and regional malls), at 94.2% at the end of 2014, the highest since the end of 1987.
Also in 2014, mall sales productivity reached an annualized $475 per square foot. The metric has been generally increasing at a healthy pace since 2009, when it was $383.
Shopping center base rents are also on the upswing, rising 6.5% year-over-year in 2014, the third consecutive annual gain and the strongest level since 2008, the data showed. For the mall segment, base rents rose 17.2% in 2014, the strongest annual gain since ICSC and NCREIF began tracking the data series in 2000. Base rents increased 15.3% in fourth quarter 2014 year-over-year, making it the fifth consecutive quarter with a double-digit gain.
In other findings, net operating income (NOI) at both shopping centers overall and the mall segment experienced the highest annual growth rate from 2013 to 2014 since the beginning of the series in 2000. NOI at malls rose 17.5% in fourth quarter 2014 year-over-year – the fifth consecutive quarter with a double-digit gain – and increased by 21.3% overall in 2014 to reach $28.62 per square foot. NOI at shopping centers solidly increased 8.3% in 2014 to reach $16.79 per square foot.
Based on U.S. Census Bureau data, the value of shopping center construction, including work done on both new and/or existing structures, reached $14.5 billion in 2014, the highest since 2008. This is an 18.6% increase over 2013, and also the fourth consecutive annual double-digit increase.
“The 2014 data paints a very strong picture of the shopping center industry for the year ahead, and is especially promising in the mall segment,” said ICSC spokesperson Jesse Tron. “Record growth in key indicators such as occupancy and NOI strongly indicate a healthy outlook and further underline the ability of the industry to innovate to fit the needs of today’s consumer.”
According to NAREIT, U.S. REITS performed well for investors in 2014 and saw a total return of 27.15% and a dividend yield of 4%, which is nearly double the S&P 500’s total return of 13.69% and dividend yield of 1.92%.
The 34 listed U.S. retail REITS delivered returns of 27.62% in 2014; regional malls were the strongest retail performers with a 32.64% return, followed by other types of shopping centers at a 29.96% return. Total returns in percent for regional malls and shopping centers in 2014 were the highest since 2010.