Mall vacancy rate best its been in 28 years, report says

REcord File photo

Westfield Garden State Plaza, the state's largest mall, had an occupancy rate at the end of 2014 that was better than the national average.

Construction of malls and new retail space screeched to a halt during the recession, and now, as a result of that, along with an improving economy, U.S. malls and shopping centers are enjoying their lowest vacancy rates in years, according to a report released Monday.

The report, by the International Council of Shopping Centers (ICSC) and the National Council of Real Estate Investment Fiduciaries (NCREIF), found that the mall occupancy rate was 94.2 percent at the end of 2014, the best level since the fourth quarter of 1987. Shopping centers - a category that includes all non-mall properties - ended 2014 with a 92.7 percent occupancy rate, the highest rate since the second quarter of 2008.

Westfield Garden State Plaza, the state's largest mall, had an occupancy rate at the end of 2014 that was better than the national average. As reported by its parent company, Westfield Corp., The Plaza was 97.1 percent leased at the end of 2014. Its 2014 sales per square foot, at $776, were 63 percent higher than the national average of $475.

The other three major malls in North Jersey - The Shops at Riverside in Hackensack, Paramus Park in Paramus, and Willowbrook Mall in Wayne - told The Record they do not release that information.

The report, which puts enclosed malls and unenclosed shopping centers in separate categories, also showed that net operating income, rents, and sales increased in 2014. Operating income at malls rose 21.3 percent in 2014 and it rose 8.3 percent at shopping centers. Base rents rose 17.2 percent at malls and 6.5 percent at shopping centers.

"We've seen this constant drumbeat, since the recession, of slow measured growth in all of the metrics as we go quarter by quarter," said Jesse Tron, a spokesman for the ICSC.

Tron said one reason enclosed malls have the best occupancy rates since the late 1980s is that a lot of new mall space was still being built in the late 1980s and the 1990s, and that kept vacancy rates higher. Now, Tron said, "we are at sort of historic lows in terms of the amount of new space that we're bringing to the market." Retailers "are as healthy as they were during peak construction years," he said, "but we're just not adding extra space for them."

The result, he said, "is we're now really seeing those occupancy rates start to climb," he said.

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Mall vacancy rate best its been in 28 years, report says