Dive Brief:

• Too few shopping centers are under construction to keep up with the demand for space, a report from CoStar revealed this week.

• Shopping center vacancies declined for the 12th consecutive quarter in the second quarter of 2015 and hover below pre-recession lows in Boston, New York, Denver and a few other major metropolitan areas, the report said. CoStar senior real estate economist Ryan McCullough said space is tighter than it was at the height of the retail boom eight years ago.

• CoStar estimated that 60 million square feet of retail space is under construction — down from 150 million square feet in 2007 when suburban populations were quickly growing.

Dive Insight:

Demand for retail space is not letting up, despite the tight inventory and a rash of store closings by Office Depot, Sears, The Gap, Kmart, Staples, Macy’s, and grocery chain A&P.

Retailers who cannot find newly built space — or the land to build it on, especially in the best locations — are taking over storefronts occupied by newly shuttered businesses as quickly as they hang their out-of-business signs.

A result: Rents for retail space are growing by approximately 3% a year overall and by more than 7% in denser urban areas.

Some chains are solving the space problem by venturing into less-desirable locations. Wal-Mart, Dollar General, and Dick’s Sporting Goods, for example, have found some success off the beaten path. “Such activity will likely dominate retail expansion until new shopping center supply ramps up,” the report noted.