As much as 10.1% of all American retail store square footage is sitting unused, empty, and without a single tenant. This according to a source that would have incentive to inflate statistics: the National Association of Realtors.
It's a harrowing sign that the economy still has a long way to go to greet levels last seen before the financial crisis.
And it isn't just retail buildings that are feeling the pinch. The real estate industry trade group forecasts vacancies towering over 15% for office buildings, and 9% for industrial buildings for the remainder of 2013.
The "crisis" REITs haven't noticed Even as real estate sits empty across the country, two of the biggest retail real estate investment trusts, Realty Income Corp (NYSE:O). and National Retail Properties, Inc. (NYSE:NNN), reached new all-time highs in 2013:
Why does this disconnect exist?
For starters, interest rates plunged through May, when REITs were making new highs each day. As yields go down, the value of REITs -- more specifically, their cash flows -- goes up.
But there's more to it than that. Public REITs seem to own much better quality real estate than the national average. Realty Income Corp. and National Retail Properties last reported occupancy rates of 98.2% and 98.1%, respectively.
Not all real estate is created equal Real estate isn't just a place to hang a sign. Location, traffic, and access to the property all have a significant impact on the value -- and rentability -- of a retail building.
Data from Jones Lang Lasalle reveals that vacancies in major markets vary greatly based on the type of retail real estate:
The further you venture into the data, the clearer it becomes that the shopping center is at the core of real estate weakness. Shopping centers make up more than a third of all retail property in the major markets.
The obviously strong performers are single-tenant properties, which have vacancy rates under 5% in major markets.