For a variety of reasons commercial properties, especially smaller commercial properties, should warrant extra attention as 2013 begins. That's because it appears that the commercial property industry is undergoing a transformation where they might need the assistance of pavement maintenance professionals.
A number of Wall Street Journal articles point to a shift in commercial properties, especially in how they are handling themselves. In August, for example, The Journal pointed out that many struggling shopping malls are "finding salvation" by downsizing. This is happening in a number of ways but one way is that smaller real estate companies are buying large, declining properties for a song and then trying to right them. One example of how this works is Macon Mall which was acquired for $6 million following a bank forgiveness off of a $114.4 million mortgage. The mall wasn't able to compete with surrounding smaller shopping centers so the new owners demolished one-third of the building and the result already has been a slight rebound of new tenants -- and customers.
In a similar vein The Journal reported in September that it's seeing a revival of strip malls, particularly a resurrection of projects that went dormant when the economy did. Some of the projects were already underway and stopped, others are new construction; some are on propreties anchored by successful grocery stores or discount chains, fewer are stand-alone projects built from the ground up. But it's a rebound nonetheless, even if it's a slight one.
And that leads to possibly the best news about commercial properties: Vacancies have dipped and malls are working to attract new tenants. According to a report by Reis Inc., a real estate research company, the vacancy rate of malls in markets throughout the country fell to 8.7% from 8.9% in the third quarter. That's down from a 9.4% vacancy rate in the third quarter of 2011.
Working along with the decline in vacancy rate is a slight increase (.3%) in mall rents. That's the fifth month in a row rents have increased indicating a strengthening -- albeit a slight one -- in that market. Retail rates in strip malls was 10.8%, unchanged from the second quarter and down just a bit from 11% in last year's fourth quarter.
Hopefully these improvements will continue -- and each of them will likely need the assistance of some type of pavement maintenance pro along the way.