When Toys ‘R’ Us shuttered its final stores last week, a lot of damage was already done to the U.S. retail vacancy rate, which hit 10.2% in the second quarter.
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That represents an uptick from the previous quarter, according to commercial real estate data company Reis.
While the demise of the toy retailer, after it entered bankruptcy proceedings, impacted second quarter figures “more than any other retailer has in any quarter over the last nine years,” it is just the latest retailer to implode. Winn-Dixie, Kmart and Harvey store closures also influenced the retail vacancy rate last quarter, Reis reported. And during the last two years, retailers such as J.C. Penney, Macy’s and J. Crew have all shuttered stores.
Traditional brick-and-mortar retailers have been struggling to keep up with rapidly shifting consumer tastes, as shoppers increasingly turn to digital options, such as Amazon. Even Walmart has doubled-down on its e-commerce arm by boosting acquisitions and partnerships, including the recently announced deal with Lord & Taylor.
The widespread pain among the retail industry is having a broad impact on malls nationwide.
In 55 metro areas, or 71% of those examined, the retail vacancy rate rose the fastest in Fairfield, Connecticut, Little Rock, Arkansas, Long Island, New York and Central New Jersey. During the second quarter, an additional 3.8 million-square-feet of vacant retail space was dumped onto the market.
In regional malls during the same timeframe, the vacancy rate rose to 8.6%, which still remains below the post-recession high of 9.4% that occurred in 2011. Open-air shopping centers also took a hit with vacancies rising between April and June, according to Reis.
While the commercial real estate data firm does not expect to see such a dramatic number at the end of next quarter, it also does not expect the retail vacancy rate to improve any time in the near future.