U.S. retail centers hit a new — and quite positive — milestone in the fourth quarter of last year: Their average vacancy rate hit its lowest level since at least 2007.
Cushman & Wakefield reported that the vacancy rate for U.S. retail fell to 5.7% in the fourth quarter of 2022, down 20 basis points from the third quarter. That is the lowest rate on record, dating back to 2007, according to Cushman & Wakefield.
Asking rents for shopping ceners across the country rose by 0.8% in the fourth quarter to an average of $22.99 a square foot. Net absorption hit 10.9 million square feet. That’s up from earlier this year but down from 12.9 million square feet of net absorption in the fourth quarter of 2021.
Cushman & Wakefield said that 66 of the 81 markets it tracked showed positive net absorption in retail, with Chicago leading the way with 1 million square feet absorbed in the fourth quarter. The Dallas/Fort Worth market also saw a strong fourth quarter with 392,000 square feet of positive net absorption.
“The economic backdrop has become highly uncertain over the last several months, with retailers preparing for more challenging conditions in 2023, yet retail fundamentals have not yet flinched,” said Barrie Scardina, executive managing and head of retail services for Cushman & Wakefield, in a written statement. “Consumer behaviors remained healthy to close out the year: Shopping mall foot traffic exceeded 2019 levels in the final two weeks of December, and holiday sales are expected to have been modestly positive. Inflation continues to be a concern for shoppers and retailers, though the rate of price increases moderated in recent months.”