(Reuters) – U.S. neighborhood and community shopping center retail vacancy rate fell 0.1% to 10.1% in the second quarter, marking the first decline since the beginning of 2016, according to real estate research firm Reis Inc.
Despite store closures from bigger retailers, store openings have led to strong occupancy growth this quarter, Reis said.
Grocery stores have been a leading new occupant of those vacant spaces over the past year or so, along with discount clothing stores and even trampoline parks, the report said.
“The retail sector has been able to adapt to industry restructuring in a number of ways. Some stores have had success in adopting new business strategies in an effort to revitalize their brands,” Chief Economist Victor Calanog said.
Metro level statistics show fewer metros, 21 of 77, with an increase in vacancy for the quarter, down from 28 metros in the first quarter.
The regional mall vacancy rate was flat in the quarter at 9.3%, compared with the first quarter, which was hit by a number of chains announcing store closures, such as JC Penney, Payless, and others.
Reis said that with minimal construction in the pipeline, vacancy rates were stable during the quarter, but it expects the performance of malls and neighborhood and community centers to be hurt by the continuing store closures throughout the second half of the year.
For neighborhood and community shopping centers, net absorption, measured in terms of available space sold in the market, rose to 2.4 million square feet compared with a negative of about 3.9 million square feet.
Only 1.5 million square feet of new construction was completed in the quarter, a 29.8 percent drop from a year earlier, according to the report.
Both the national average asking rent and effective rent, excluding landlord concessions, increased 1.7 percent from the year-ago quarter, Reis said.
Reporting by Ashwini Raj; Editing by Shailesh Kuber