Retailers leased more new retail space at open-air shopping centers than they vacated in the second quarter, according to Cushman & Wakefield’s Q2 2021 U.S. Shopping Center MarketBeat. That’s the first time in more than a year positive absorption occurred at such properties. Retailers leased a net 1.8 million square feet at open-air shopping centers during the second quarter. Across the five previous quarters, they had vacated a net 24.5 million square feet, according to Cushman & Wakefield.

At power centers in the second quarter, retailers vacated 2.5 million square feet more than they leased, but neighborhood centers and strip centers offset that negative performance. Retailers leased 1.9 million square feet more at neighborhood than they vacated and 2.3 million square feet more at strip centers than they vacated.

According to Cushman & Wakefield, the largest positive net absorption in open-air shopping centers occurred in the Inland Empire, at 694,330 square feet; Las Vegas, at 444,603 square feet; Atlanta, at 423,350 square feet; New Orleans, at 249,022 square feet; and Dallas-Fort Worth, at 215,647 square feet.

Demand is healthy but still below long-term levels

Open-air leasing volume also increased in the second quarter, according to Cushman & Wakefield. New retail leases at open-air centers totaled 27.4 million square feet, marking the fourth consecutive quarter that it landed between 25 million and 30 million square feet. This is well above the 21.3 million square feet in the second quarter of 2020. However, it’s well below the 36 million-square-foot average between 2012 and 2019.
The open-air shopping center vacancy rate remained flat in the second quarter of 2021, at 7.3%, thanks to positive absorption and a restrained 2.4 million square feet of new-construction completions. Neighborhood centers had the highest vacancy rate, at 7.9%, while power centers recorded 6% and strip centers 6.1%.

Rents keep climbing

While vacancy rates are trending moderately higher in most markets and in most open-air shopping center types, things still haven’t hit the lows they did during the recession of 10 years ago. As a result, landlords feel little pressure to lower their asking rents. Average market rents, in fact, climbed 1% during the second quarter, to $21.22 per square foot, according to Cushman & Wakefield. Rents rose from the preceding quarter in 65 of the 81 markets the firm covers.

The murals keep coming

Queens, New York’s Rego Center — owned by Alexander’s, which is managed by Vornado Realty Trust — is adding a mural by local artist Rob Anderson, his largest painting ever at 2,000 square feet. Visitors can watch it take shape until it’s unveiled next month. The public also can join in one of his interactive paint-by-numbers projects, called Kittizens, from 12:30 to 5 p.m. on each July 31 and Aug. 1.

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