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Issue Date: Vol. 52, No. 11, November 2012, Posted On: 10/18/2012

Are Strip Malls Seeing Comeback? Not So Fast, Say The Cautious

Hank Schlesinger
TAGS: vending, vending machine location, bulk vending, amusement operators, mall foot traffic, strip mall trends, Reis Inc., retail market research

The commercial real estate press and blogosphere have been abuzz in recent weeks with conflicting reports on strip malls. This may be good, if uncertain, news for bulk vending operators who often rely heavily on the anchor supermarkets and other retail stores found in the typical strip mall. But following several months of good news regarding strip mall development, disappointing retail sales data have the naysayers saying, "Nay."

First the good news. According to multiple press reports, major developers such as Regency Centers Corp., Weingarten Realty Investors and Brixmor Property Group, recently reported plans for development of properties that were shelved during the economic downturn. Some of these, according to the real estate business press, are "ground-up" projects while others take the form of revitalizing developments left unfinished after the real estate meltdown.

Now the not-so-good-news. In all, the revitalized and new projects represent a relatively small number that roughly parallels the minuscule declines in vacancies and flat or still-declining rents from a year prior. That is one reason those with a more pessimistic outlook view the nascent revival as either too small to matter or stalled. The real action, they report, isn't in strip malls; it is the larger regional malls that are leading the recovery. Recent figures compiled by real estate research firm Reis Inc. show continued third-quarter progress in this sector with vacancy rates as low as 8.7% -- down from 9.4% last year -- though still far from the record low of 5.5% in the halcyon pre-crisis third quarter of 2007.

According to Reis, any mall recovery is being driven by high-end sites at upscale department stores and specialty shops. Mid-range malls catering to middle income consumers are still struggling. This would be consistent with the slow, uncertain economic recovery most consumers are experiencing, according to the sages of the real estate blogosphere.

For vending and coin machine operators who target new developments, the situation remains a matter of wait and see, though both naysayers and optimists appear hopeful.

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