Regional malls saw an all-time high 11.4% vacancy rate during the first quarter of 2021, but Moody’s REIS shows that foot traffic could pick over the remainder of the year, GlobeSt.com reports. Placer.ai, a research firm that tracks foot traffic retailers and other industries, looked at more than 50 of the top tier malls in the U.S. The firm’s findings indicated that the mall industry’s year-over-year gaps have gotten smaller since November. March proved to be a “blockbuster” month for malls, as visits increased 86% year-over-year.
Placer urges retailers and mall property owners to maintain a steady level of enthusiasm, however.
“While this number is indeed impressive, it is also a very limited indicator as much of these same malls were already closed by mid-month in 2020, thus challenging the effectiveness of the metric to show what is really happening in context,” the firm noted.
The comparison between visits in 2021 and 2019 to the same malls might be a more accurate metric, according to Placer. The visit gap there was brought down to 23.9%.
“This was buoyed heavily by a 43.6% jump in visits between February and March further indicating that the ‘return’ to malls is in fact in full swing,” according to Placer.ai “And even accounting for the weather challenges in February and the fewer overall days, there was still a 25.7% jump in visits in March when compared to January, which had been a high point for the sector until then.”
Placer.ai’s additional results showed that weekly mall visits increased consistently in late February, throughout early March compared to the week before, GlobeSt.com reports. Meanwhile, visits during the week of March 15 and March 22 were a little more than 19% higher than the previous two weeks and marked high points in mall’s recovery.
“Does this mean the mall sector has completed its recovery? Certainly not,” Placer.ai VP of Marketing Ethan Chernofsky wrote. “But it does mean that top tier malls throughout the country still have exceptional strength. Their continued capacity to rebound quickly when given the opportunity speaks to the continued strength in the sector, and explains why the format still deserves its lofty position within the retail landscape.”
Retail rents may also see an uptick—but not until 2022
Malls had their share of troubles even before the COVID-19 pandemic hit, mainly because of the uptick in online shopping. The health crisis just compounded mall’s troubles as stay-at-home orders were put in place and shoppers had no choice but to turn to e-commerce. The U.S. retail market saw negative rent growth (a 0.5% decrease) for the first time since 2011.
Colliers’ recent analysis shows the lack of rent growth will continue in 2021—retail rents could drop by 3% this year. However, Colliers projects retail rents will get back to pre-COVID-19 levels in 2022. The firm also noted a rise in rent collections should be a sign that the mall industry finding solid footing again could happen sooner than later.
Joe Dyton can be reached at joed@fifthgenmedia.com
