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MALL RETAIL RENTS UP, VACANCIES DOWN

Mall vacancy rates reached a three-and-a-half-year low, according to a survey of the top 62 U.S. markets by Reis, a New York City-based research firm. Fourth-quarter mall vacancies averaged 5.3 percent, down from 5.5 percent in the third quarter. Open-air center vacancy rates averaged 6.8 percent for the quarter, down from the previous quarter’s 6.9 percent. Asking rents were up, averaging $37.89 per square foot for malls and $17.98 per square foot on the open-air side. But mall rents still lag the $37.93 per-square-foot high they posted during the fourth quarter of 2003. For the past three quarters, rents have risen or stayed flat, while vacancies at retail properties overall have fallen off.

DEPARTMENT STORE SALES BOOM IN FLORIDA

Floridians love their department stores, according to an ICSC survey of same-store sales in 100 U.S. markets. Between February and December 2004, the top three markets in terms of department store sales growth were Miami-Fort Lauderdale-Miami Beach (up 10.3 percent), Sarasota-Bradenton-Venice (up 9.1 percent) and Palm Bay-Melbourne-Titusville (up 8.8 percent). By comparison, sales for U.S. department stores overall grew 1.7 percent over the period. Department stores in Florida get “far fewer” merchandise returns than other states because of the tourists, says John M. Crossman, principal of real estate services company Trammell Crow. The softest markets were mostly in the Midwest. In Toledo, Ohio, department store sales fell 5.5 percent, and in both Akron, Ohio, and Little Rock, Ark., they sank 5.4 percent. Stagnant population and housing construction rates may be hurting sales in the Midwest and South, says Anne Galbraith, head of the Cushman & Wakefield retail group covering the Midwest.

MALL GETS LUXURY-DISCOUNT ANCHORS

Target is joining Neiman Marcus as an anchor at Westfield Shoppingtown Topanga, a regional mall in the San Fernando Valley, near Los Angeles. This combination of luxury and discount anchors is a first for the mall business, says Richard Green, vice chairman of Westfield Group’s U.S. operations. “The anchors have encouraged us to do this,” he said. “We couldn’t have done it otherwise.” The 160,000-square-foot Target will open next fall, and the Neiman Marcus is slated to open in the spring of 2008. Westfield is expanding the mall to about 1.6 million square feet, at a cost of $300 million. Construction is set to begin this spring.

2004 A RECORD YEAR FOR COMMERCIAL MORTGAGES

Commercial mortgage lending hit a record in 2004, and the market remains hot so far this year, according to a Mortgage Bankers Association survey. Lenders provided $136 billion in commercial mortgage loans last year, according to the association’s commercial mortgage banker origination survey, up 16 percent from $117 billion in 2003. Low interest rates, flexible lending policies and strong borrower demand drove the activity. Retail real estate loans last year totaled $24 billion, up 20 percent from the $20 billion completed in 2003. Association officials say they anticipate further commercial mortgage loan growth this year, though they have yet to announce any projections.

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