Most of our readers here at Kansas City Real Estate & Investing are residential investment property owners…or owners of primary homes. But I like to keep an eye to commercial real estate as well since my wife and I also own a small business: Portraits Today Studios in Olathe, Kansas.
So when I read stories like this one from today’s Kansas City Star it catches my attention. It’s a longer article so let me just show you the key paragraphs.
A new study by real estate researchers Reis Inc. found that shopping center vacancies rose in the third quarter to a 17-year high as unemployment climbed, consumers cut spending and stores closed. Vacancies at neighborhood and community shopping centers increased to 10.3 percent — the highest level since 1992 — compared with 8.4 percent in 2008. Vacancies at regional and super-regional malls rose to 8.6 percent from 6.6 percent a year earlier, a high for this decade.
Rents also have dropped, to $39.18 on average at regional and super-regional malls from $40.62 a square foot a year earlier. The 3.5 percent decline is the worst year-over-year deterioration in a decade, Reis said.
“Until we see stabilization and recovery take root in both consumer spending and business spending and hiring, we do not foresee a recovery in the retail sector until late 2012 at the earliest,” Victor Calanog, Reis’ research director, said in a statement.
In my lifetime I cannot ever remember seeing so much empty space in our local shopping centers. Trying to think back to the recessions of the late ’70s and early ’80s I just don’t think I remember as many shopping centers. Big companies have fallen in droves and closed up shop. True to American history, it will be the Mom & Pops that will rebuild the retail sector. Mark my words.
For those that long to be commercial real estate investors I would have you look at today’s economy. I think, by far, those that purchased residential rental property on proper fundamentals are weathering this storm in far better shape than the non-corporate commercial investors.