The International Council of Shopping Centers (ICSC) and the National Council of Real Estate Investment Fiduciaries (NCREIF) reported on property data results for Q4 2014 and year-end 2014, and found strong growth in the U.S. shopping center industry with year-over-year growth in occupancy rates, rents and net operating income.
The data showed that shopping center occupancy rates were 92.7% at the end of Q4 2014, the highest level since Q2 2008. For the mall segment (combined super-regional and regional malls), occupancy rates were 94.2% at the end of 2014, a level not seen since Q4 1987.
Shopping center base rents rose 6.5% year-over-year in 2014, the third consecutive annual gain and the strongest level since 2008. For the mall segment, base rents rose 17.2% in 2014, marking the strongest annual gain since ICSC and NCREIF began tracking the data series in 2000; and increased 15.3% in Q4 2014 year-over-year, making it the fifth consecutive quarter with a double-digit gain.
NCREIF and ICSC data shows net operating income (NOI) at both shopping centers overall and the mall segment saw the highest annual growth rate from 2013 to 2014 since the beginning of the series in 2000. NOI at malls rose 17.5% in Q4 2014 year-over-year – the fifth consecutive quarter with a double-digit gain – and increased by 21.3% overall in 2014 to reach $28.62 per square foot. NOI at shopping centers solidly increased 8.3% in 2014 to reach $16.79 per square foot.
In 2014, mall sales productivity reached an annualized $475 per square foot. This indicator has been generally increasing at a healthy pace since 2009, when it was $383.
“The 2014 data paints a very strong picture of the shopping center industry for the year ahead, and is especially promising in the mall segment,” said ICSC spokesperson Jesse Tron. “Record growth in key indicators such as occupancy and NOI strongly indicate a healthy outlook and further underline the ability of the industry to innovate to fit the needs of today’s consumer.”
According to NAREIT, U.S. REITS performed well for investors in 2014 and saw a total return of 27.15% and a dividend yield of 4%, which is nearly double the S&P 500’s total return of 13.69% and dividend yield of 1.92%. The 34 listed U.S. retail REITS delivered returns of 27.62% in 2014; regional malls were the strongest retail performers with a 32.64% return, followed by other types of shopping centers at a 29.96% return. Total returns in percent for regional malls and shopping centers in 2014 were the highest since 2010.
Based on U.S. Census Bureau data, the value of shopping center construction, including work done on both new and/or existing structures, reached $14.5 billion in 2014, the highest since 2008. This is an 18.6% increase over 2013, and also the fourth consecutive annual double-digit increase.
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Source: International Council of Shopping Centers (ICSC)
