The consequence for consumers: Fewer stores to shop and less product choice.
In just the first quarter of 2009, retail tenants at these centers have vacated 8.7 million square feet of commercial space, according to the latest report from New York-based real estate research firm Reis.
That number exceeds the 8.6 million square feet of retail space that was vacated in all of 2008.
Reis' report shows that store vacancy rates at malls rose 9.5% in the first quarter, outpacing the 8.9% vacancy rate registered in all of 2008, and marking the largest single-quarter jump in vacancies since Reis began publishing quarterly figures in 1999.
"These record numbers are symptomatic of the pervasive weakness that we're seeing across economic sectors," said Victor Calanog, director of research with Reis.
"Consumers are worried about their asset bases and they aren't buying things," he said. "Their home values and retirement accounts are still reeling, and consumers remain concerned about future income as job losses accelerate."
Even though mall operators and landlords have responded by reducing rents by about 1.8% on average in the first quarter - the biggest quarterly drop in rents since 1999 - it's not enticing businesses to stay put, Calanog said.
"If you're going out of business because people aren't shopping, then lower rents won't make a difference," he said.
Unfortunately for retailers, it's only going to get worse, according to Reis' forecasts.
Calanog said he expects mall vacancies to exceed historical levels through 2011 before they stabilize sometime in the middle of 2012.
"Commercial real estate usually shows a lag based on jobs growth," he said. "In the last down cycle, commercial rents didn't turn positive until 18 months after jobs started to grow."
Any turnaround for retail centers, he said, is also "incredibly contingent on the unfreezing of credit market and a broader economic recovery."
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