Thriving open-air sector celebrated at OAC Summit

Attendees are exploring a range of topics at this three-day event. Among those topics are a presentation from venture capital firms and some discussions about Millennials, e-commerce, the grocery sector, gyms, retail center design, spending trends and much more.

Open-air centers have turned in a robust performance in recent years. Investment in grocery-anchored centers alone was up by 5.3 percent year on year in 2017, according to JLL. Vacancy rates at open-air centers have stayed low, thanks to restrained development: Developers rolled out roughly 14 million square feet of open-air center space in the U.S. through the third quarter of 2017. Last year, for the eighth year straight, completions represented less than 0.5 percent of open-air inventory, according to Marcus & Millichap. This compares with an annual growth rate of about 1.9 percent in 2008 and 2009, when open-air center developers brought approximately 180 million square feet onto the market.

Thanks to this restrained growth, the average vacancy rate in the sector since 2011 has eased by nearly 300 basis points, to 8 percent at the end of the third quarter of 2017, according to Alan Pontius, national director of Marcus & Millichap’s specialty divisions. Meanwhile, after bottoming out at about $13.48 per square foot in 2013 — off by $2.30 per square foot from the previous peak — the average rental rate at open-air centers edged back up to $14.12 per square foot.

Roughly 14 million square feet of open-air shopping center space was under construction in primary and secondary markets in December, according to JLL and CoStar.