Lawrence’s commercial real estate market has begun to rebound from a downturn that began in 2001, area real estate professionals said Thursday.

Lawrence vacancy rates for office, industrial and retail real estate all checked in below the national averages, agents with Lawrence’s Grubb & Ellis/The Winbury Group, said at the company’s annual Lawrence commercial real estate conference.

“I actually think it is a healthy market right now,” said Kelvin Heck, a broker with Grubb & Ellis. “I know if you are sitting on an empty building, you don’t think it is healthy, but if you look at the big picture, I think it has become a good market again.”

According to a study using data from the Douglas County Appraiser’s office, the real estate company found the following vacancy rates:

• Office space had a vacancy rate of 15.7 percent, down from 17.8 percent in 2002. The national average in 2003 was 17.5 percent.
• Industrial space registered a 5.3 percent vacancy rate, unchanged from a year ago. Nationally, the average is 10 percent.
• Retail space had a 7.2 percent vacancy rate, up from 5.2 percent a year ago. But the report noted that when already-announced tenants move into the former Kmart building at 31st and Iowa streets, the rate will fall to 5.3 percent. The national average is 12.3 percent.

Kelvin Heck and Allison Vance Moore, commercial real estate agents with Grubb & Ellis/The Winbury Group, leave an annual commercial real estate meeting at the Eldridge Hotel. Thursday's meeting included an update on the city's commercial real estate market, which includes properties such as the space at right located just north of Starbucks Coffee, 647 Mass. The space recently has been leased, but the name of the company hasn't been released.

Heck said the decline in vacancy rates was a reversal from 2002 and early 2003 when activity in the commercial real estate market was slow.

Other investors who attended the conference at the Eldridge Hotel agreed the market was improving.

Lawrence resident George Paley, who owns retail and office space across the city, said the downturn began in the summer of 2001 and became significantly worse after 9-11.

“But now I think we’re at the beginning of a rebound in the market,” he said.

Bill Newsome, of Lawrence-based Southwind Capital, said he still saw softness in the Lawrence market but was becoming more optimistic about the outlook.

“Compared to the national averages, we’re probably marginally better,” he said.

“Lawrence isn’t setting the world on fire though, but there aren’t many communities that are setting the world on fire right now. I’m expecting to see a small uptick in demand in 2004.”

Others also expect next year to be better. Paley said he expected vacancy rates to fall by 2 percent to 3 percent in 2004.

“I don’t think it will be a roller coaster type of drop though,” Paley said.