Archive for Friday, January 16, 2009

Real estate faring well in city

Vacancy in Lawrence grew by less than one percent in 2008, and dropped by about 3 percent downtown.

January 16, 2009


More information

Grubb Ellis

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.


Richard Heckler 9 years, 3 months ago

Keep in mind real estate executives like to make things sound rosy because they believe rosy talk is good for business. =============================Summary The retail market of Lawrence, Kansas is out of balance, with space growing much faster than demand for that space. Growth in supply • From 1995 into 2007, the stock of retail space grew 3.0 percent per year. Growth in demand • The inflation adjusted pace of growth in demand for retail space is growing at a rate of little less than 1 percent per year. • The number of retail firms has been effectively flat and retail employment has fallen from 2001 to 2007. Mismatch • The mismatch between the pace of growth in supply and the pace of growth in demand is large (supply is growing at a pace 3 times the pace of growth in demand), and it is long-term (lasting more than a decade). Proposed developments • Proposed developments will add over 800,000 square feet of retail space. This represents an increase in the already overbuilt stock of over 12 percent. Consequences of the mismatch • There is over 540,000 square feet of vacant retail space in Lawrence, 395,000 south of it river. • About 364,000 of this vacant space south of the river is in general merchandise, automotive, and food use, a category that developers are seeking to expand further. • The surplus stock is creating blight that was contained in North Lawrence but is now spreading. • The City cannot absorb more space; additional stock will only increase vacancies throughout the City. • The City needs to protect itself from the harm of this overbuilding by slowing the pace of retail development. McClure Professor Graduate Program in Urban Planning University of Kansas Ph. D., Urban Planning, University of California at Berkeley, 1985; Master of City Planning, Massachusetts Institute of Technology, 1978; Bachelor of Arts, Urban Studies, University of Kansas, 1974; *Bachelor of Architecture, University of Kansas, 1973.

jafs 9 years, 3 months ago

Harrisburg, PA instituted an interesting tax policy - they created a tax for property that was vacant for too long. This encouraged property owners to use/rent their property rather than allowing it to remain vacant and use the tax write-offs.

Chris Ogle 9 years, 3 months ago

I don't know anybody in Lawrence struggling to find tax write-offs these days.

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