Where Have All the Retailers Gone?

Persistent unemployment and inconsistent consumer spending has caused more than a few empty spots in malls across the country, but at least one shopping center trade group is bullish about prospects improving by the end of the year.

According to New York real estate tracking firm Reis Inc., vacancies in the first quarter rose 8.9% at U.S. regional malls and super-regional centers like the Mall of America in Minnesota and South Coast Plaza in Southern California. That was the highest vacancy rate since 2000, down from an 8.8% vacancy rate for the fourth quarter, but well above a rate of 7.9% a year earlier.

“The expected slow pace of job growth and inconsistent consumer spending patterns will weigh on tenants for at least another 12-18 months,” Victor Calanog, director of research at Reis, said in the statement.

Vacancies at smaller neighborhood and community centers rose to 10.8%, the highest since 1991, from 9.5% a year earlier and 10.6% in the fourth quarter, Reis said. For the complete report, check out Reis Inc.’s website .

Reis’ Calanog was not the only expert concerned about the uncertain direction of the U.S. economy. According to the minutes of the Federal Reserve recent policy meeting released Tuesday, Fed members cautioned that the recovery may sputter in the coming months, possibly weighed down by stalls in certain sectors.

However, Jesse Tron, a spokesman for the International Council of Shopping Centers, said that mall stores have been experiencing increased sales over the past several months, and if the trend continues, vacancy rates could drop sooner than expected.

Sales at U.S. retail “chain” stores in January rose 3% from a year earlier, and another 3.7% in February, and the trade group is predicting roughly 8% sales growth for March. For all of 2010, the group expects sales at retail chain stores to rise 3.5%.

“If sales are healthy and if all of the economic indicators remain positive, it would make sense that vacancy rates would come back down,” Tron said. Though, “a lot of it will have to do with whether credit unfreezes -- if retailers have more credit, and shopping centers have more credit to develop or redevelop, then vacancies will likely lower again.”