U.S. shopping center profitability climbs in 1Q- shopping Centers Today Strong leasing momentum propelled profitability to new heights at U.S. shopping centers in the first quarter. During the first three months, total operating income of all U.S. shopping centers on a square-foot basis grew by 3.5 percent from the comparable quarter last year. First-quarter operating expenses rose by a slightly faster 3.8 percent compared with the same period last year. As a result, net operating income per square foot posted a healthy 3.3 percent gain from last year’s first quarter. These numbers are based on NCREIF’s database of 1,000 shopping center properties. “Retail had the best total investment return in the NCREIF property index for the first quarter and over the past year,” said Jeffrey Havsy, NCREIF’s director of research. “After three consecutive quarters when industrial properties led the index, retail properties returned to the top of the list, with the strongest commercial real estate performance by subtype. Healthy underlying fundamentals, especially in the super-regional malls, helped to propel that strong first-quarter retail return.” During the first quarter, U.S. shopping center performance by type remained uneven. Super-regional malls posted a record NOI gain of 33.4 percent compared with last year’s comparable quarter. At the other extreme, regional-mall NOI tumbled by a record 13.8 percent. The regional and super-regional mall sectors, however, posted a combined 10 percent gain for the first quarter, following a 10.4 percent rise for fourth-quarter 2013 and a 10.5 percent gain for the third quarter of 2013. Power center NOI growth was the second-strongest segment during the quarter, with a 4.2 percent increase, followed closely by neighborhood centers’ 3.7 percent. Community center profits were off 7.3 percent for the first quarter. “A harsh winter in some regions hurt business, but strong re-leasing spreads among the super-regional mall segment helped drive revenue,” said Michael P. Niemira, ICSC’s chief economist and vice president of research. “After an extremely strong rise in 2013 NOI growth, ICSC reiterates its previous expectation that U.S. industry profit growth will likely moderate in 2014, but that moderation — as already reflected in these first-quarter data — is more sustainable.”
Posted on: Fri, 09 May 2014 14:21:32 +0000