Lawrence’s retail market is holding up better than many other areas of the country, a group of real estate leaders told a local crowd Thursday.
But they also said to expect rising vacancy rates in 2009.
“I don’t want to be too Pollyanna because the reality is that it is tough, but there are still opportunities out there for Lawrence,” said Kelvin Heck, a broker with Lawrence’s Grubb & Ellis/The Winbury Group, which was host to a commercial real estate outlook event at the Lawrence Arts Center.
Lawrence’s retail vacancy rate rose less than 1 percent in 2008, ending the year at 5.4 percent, according to figures compiled by the real estate firm. The firm projects the vacancy rate to increase to about 6.5 percent in 2009, although real estate agents said it could go higher given the uncertainty of how long the current recession may last.
“Shopping centers will be the category most at risk,” said Bob Bach, the real estate company’s chief national economist. “This is definitely a consumer-led downturn.”
Nationally, retail vacancy rates are expected to be at 10 percent or more in 2009.
Planners with the Lawrence-Douglas County Planning office said they’ve seen data that suggest the Lawrence vacancy rate could reach 8 percent or more in 2009. The department traditionally does its own report on vacancy rates in the city, but said one was not done in 2008 because of time constraints.
But the department has received privately prepared market studies that have been submitted with proposed developments. Scott McCullough, the city’s director of planning, said the most recent report that accompanied a rezoning request for a 200,000-square-foot retail center at O’Connell Road and 23rd Street indicated that the new project would push Lawrence’s vacancy rate to 8 percent or more if all the space were built without first finding a tenant.
McCullough said the city does plan to conduct its own vacancy rate study in 2009. The city’s long-range comprehensive plan requires the city to give new commercial developments extra scrutiny if the city’s overall vacancy rate is at 8 percent or more.
Other numbers from the report by Grubb & Ellis:
• The vacancy rate for office space in the community stood at 11.5 percent at the end of 2008, up from 10 percent in 2007.
• The vacancy rate for industrial space stood at 3.9 percent, up from 3.4 percent.
• The retail vacancy rate in downtown dropped by about 3 percent in 2008 to end the year at 4.9 percent. The vacancy rate for office space in downtown, however, stood at 19.9 percent.
• The retail vacancy rate on South Iowa Street was 6.2 percent.
• The amount of vacant industrial space along Interstate 70 in Lawrence stood at a low 1.7 percent.