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Research + Studies

1Q shopping center occupancy, NOI, rents strong

May 11, 2018

North America’s shopping centers performed robustly in the first quarter, with occupancy, rents and net operating income all rising across the sector as a whole, according to ICSC Research, citing NCREIF figures.

Occupancy reached 93.2 percent during those first three months, up from 92.4 percent for the year-ago quarter. On average, rents rose by 2.3 percent, relative to the 2017 first quarter, while NOI went up by 1.4 percent.

“Both base rents and NOI have risen for 25 consecutive quarters, and occupancy rates are nearly at prerecession levels,” said Jean Lambert, vice president of ICSC Research. “These numbers stand in sharp contrast to some of the sensationalist headlines we’re reading in the media.”

“Both base rents and NOI have risen for 25 consecutive quarters, and occupancy rates are nearly at prerecession levels”

Open-air centers and enclosed malls performed well. Open-air occupancy rates hit 93.5 percent in the first quarter, up from 92.5 percent in the previous year's comparable quarter, and base rents went up by 2.6 percent, with NOI rising by 0.8 percent. Base rents at malls grew by 1.6 percent, and NOI on that side increased by 3 percent.

Shopping centers in the Midwest turned in the most-improved NOI performance, up by 8.8 percent, with neighborhood centers performing particularly well. NOI in the South, meanwhile, jumped significantly too, up by 4.1 percent.

“This shows that retail real estate is holding up well,” Lambert said, “and adapting to the challenges of an evolving retail landscape.”

The full report is accessible here.

By Edmund Mander

Director, Editor-In-Chief/SCT

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