City’s retail vacancy generally improves
Downtown has more empty space because of Borders closing, unfilled offices
Businesses began filling up vacant spaces in many parts of Lawrence in 2011, but downtown Lawrence wasn’t necessarily one of them.
A new study by the Lawrence office of Colliers International found the city’s overall retail, office and industrial vacancy rates all fell in 2011, and all were significantly less than national averages.
“It is not champaign-cork-popping time yet, but it is an improvement,” said Chris Kuehl, an economist with Armada Corporate Intelligence, who spoke at Colliers’ annual Commercial Real Estate Forecast Event on Thursday afternoon. “It does seem like more businesses are thinking about the future again.”
Downtown Lawrence, however, did feel the sting of a high-profile retail closing and several office tenants that left the area. Downtown’s retail vacancy rate rose from 5.3 percent in 2010 to 7.3 percent at the end of 2011, with most of the increase coming from the closure of the 20,000-square-foot Borders store at Seventh and New Hampshire streets.
“I would tell you that the rest of downtown has held pretty steady, said Kelvin Heck, a broker for the Lawrence office of Colliers. “I know a lot of people have been talking about downtown, but I don’t think the sky is falling just yet.”
The vacancy rate for downtown office space, however, has spiked to about 21 percent. Numbers for 2010 weren’t immediately available, but Heck said the office vacancy rate clearly rose during the year. Part of the increase is because a significant amount of new space came on the market. The second floor the seven-story building at 901 N.H. is office space. Doug Compton’s First Management Inc. hopes to move its corporate offices to the space, but it is currently vacant while First Management looks for someone to take its current office space in northern Lawrence.
The downtown office market also suffered a loss as Willis — the company that bought the former Charlton Manley insurance firm — moved its offices to suburban Johnson County. The downtown office rate also includes empty space in the former Riverfront Mall, which is now being marketed largely as an office building.
It was the city’s overall vacancy rate numbers, though, that had several at Thursday’s event believing that the economy was improving. Those numbers were:
• The citywide retail vacancy checked in at 4.7 percent, down from 5.4 percent. The numbers don’t yet take into account announcements by Sears and Old Navy regarding pending closures of their Lawrence stores. But brokers at Thursday’s event said interest in those South Iowa Street locations has been strong.
“There is a lot of activity happening behind the scenes right now,” said Allison Vance Moore, a Colliers broker who works in the retail market.
Lawrence’s retail vacancy rates were well below both the national average of about 9.5 percent and the Kansas City average of 7 percent.
• Overall office vacancy dropped slightly to 10.6 percent, down from 10.9 percent a year ago. The national average is estimated to be about 12.5 percent and the Kansas City average is a bit above 13 percent.
• Industrial vacancy dropped to 6.18 percent, down from 8.2 percent a year ago. Two new East Hills Business Park tenants helped drop the total. Lawrence-based Grandstand Sportswear and Glassware took over the vacant Sauer-Danfoss building, and Plastikon took over the vacant Serologicals building. The national vacancy rate for industrial property stands at about 10 percent, while the Kansas City rate is about 6.5 percent.
Heck said he is projecting that 2012 will produce slightly better results than 2011.
“I think there are quite a few businesses that have gotten tired of waiting for tomorrow to be a better day,” Heck said. “They’re tired of waiting, tired of treading water, so they’re taking action now.”