Lawrence’s commercial real estate market weathered the storm better than expected in 2010, according to new numbers released Thursday by one of the city’s largest brokerage firms.
“I believe we’ve begun to turn the corner,” said Kelvin Heck, a broker with the Lawrence office of Colliers International. “But it has been and continues to be a very, very wide turn.”
The company, formerly Grubb & Ellis/The Winbury Group, put together its 10th annual commercial real estate market summary and forecast. Heck said perhaps the biggest surprise in the findings was that the city’s retail vacancy rate actually fell in 2010.
The retail vacancy rate dropped to 5.4 percent, down from 6.3 percent a year earlier. Lawrence’s rate was lower than the national average of about 7 percent and also less than the Kansas City average of about 10 percent.
Heck said a new Discovery Furniture store that went into the former Food-4-Less grocery store on South Iowa Street had the biggest impact on Lawrence’s vacancy rate. About 12,000 square feet of vacant space in front of the Best Buy store at 31st and Iowa streets also was leased in the last year.
Colliers officials, though, stopped short of predicting major improvements in retail in 2011. A “modest increase” in the vacancy rate actually may occur this year. Heck said although Lowe’s had shown some interest in the city, if that deal does not re-emerge he’s not sure the city will see much activity in the way of big-box retail.
“The big retailers seem to have pulled in their plans a bit, I believe,” Heck said.
Other findings from the report, which was presented at a Colliers conference at the Lawrence Arts Center, included:
• The vacancy rate in the city’s office market is 10.9 percent, down from 13.2 percent a year ago. The national average and the Kansas City average are both about 13.5 percent. Office vacancy rates are expected to be flat in 2011.
• The closing of the 155,000-square-foot Sauer Danfoss plant pushed Lawrence’s industrial vacancy rate to 8 percent, up from 6.4 percent a year earlier. Lawrence’s rate is lower than the national average of about 10.5 percent, but higher than the Kansas City average of about 7 percent.
The vacancy rate is expected to go down when Plastikon Industries moves into the former Serologicals facility in the East Hills Business Park. But that will still leave East Hills with two other large buildings to fill: the Sauer Danfoss facility and the approximately 80,000-square-foot Progress Vanguard building.
A panel of city and business leaders at the Colliers event said the city will need to continue to look for large users, but needs to be prepared to take on small projects.
“When you start looking at what the future will be, I think it will be in technology firms and small organizations,” said City Commissioner Rob Chestnut, who served on the panel. “When you look at the job growth numbers, they’re really not coming from the large employers.”