Regional mall vacancies declined slightly in the most recent quarter, though obviously given the sky high vacancy rate in absolute terms nobody is popping the cork on the champagne for this industry.
Still the basic dynamics here illustrate the case for recovery—as long as the economy is growing a litte, which it is, this vacancy rate should fall and with it the rate of return on hypothetical new investments in mall building. Overall the gap between the too-high real interest rate and the market clearing interest rate is narrowing. We’re not going to have a mall-led recovery—we’re looking to autos, multifamily housing, mining infrastructure, and consumer durables—but the pattern is out there.
