Retail Real Estate Continues Slide

New York, NY, July 7, 2010--Retailers closed more stores in shopping centers during the second quarter, according to research firm Reis Inc.

Shopping centers and strip malls have been hit harder than other types of real estate by weak consumer spending, anemic job growth and an oversupply built to serve new housing that never materialized.

"Until we see stabilization and recovery take root in both consumer spending and business spending and employment, we do not foresee a recovery in the retail sector until late 2012 at the earliest," said Victor Calanog, Reis director of research.

For U.S. strip centers, the vacancy rate in the second quarter rose 0.10 percentage point from the first quarter to 10.9 percent, slightly below the 11 percent in 1991 during the prior real estate bust, according to the Reis quarterly report, released on Wednesday.

Unlike the office or apartment real estate sectors, a meaningful recovery in retail real estate is expected to be very sluggish, Calanog said.

Rents are not expected to return to 2008 levels before 2016, he said.