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Archive for Thursday, January 12, 2012

City’s retail vacancy generally improves

Downtown has more empty space because of Borders closing, unfilled offices

Traffic and pedestrians move about Massachusetts Street in this Aug. 2011 file photo. 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.

Traffic and pedestrians move about Massachusetts Street in this Aug. 2011 file photo. 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.

January 12, 2012

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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.”

Comments

lunacydetector 2 years, 10 months ago

on average, how many years does thei space stay vacant?

irvan moore 2 years, 10 months ago

if it wasn't for mexican restaurants downtown would be a ghost town

jafs 2 years, 10 months ago

Italian, middle Eastern, chinese, indian, greek, etc. restaurants are all found downtown as well.

progressive_thinker 2 years, 10 months ago

As well as our community icon restaurant, Free State Brewing company.

Boston_Corbett 2 years, 10 months ago

It is too bad that Chuck Magerl and Free State will be forced to close because of the smoking ordinance.

progressive_thinker 2 years, 10 months ago

First I have heard of any rumor of them closing. What gives?

jafs 2 years, 10 months ago

And, yet, even if true, they're still open, and still making a profit.

Boston_Corbett 2 years, 10 months ago

Larrynative: 1) I really don't believe it, but if so, 2) look how many new restaurants now exist downtown. Maybe more restaurants are cutting up the same pie.

The smoking ordinance did not kill either the FS Brewery or the Lawrence restaurant industry in general.

Cant_have_it_both_ways 2 years, 10 months ago

Sales taxes overall have a lot to do with the empty space. Why pay almost 9% when you can order online for the cost of shipping.

EJ Mulligan 2 years, 10 months ago

Psst, Chad: It's "champagne." Unless they're popping corks in an Illinois town.

ksjayhawk74 2 years, 10 months ago

It does really surprise me that more development happens in the expanding areas of town, than in the heart of Lawrence, Mass. St.

There are plenty of retail business categories that are wide open in the downtown area. Yes, you might be able to get some things cheaper online. However there are so many people that visit Mass St., marketing to them should be like shooting fish in a barrel.

All the students, student parents, tourists, business people & Downtown workers really add up.

There could easily be a time in the very near future when Vermont and New Hampshire Streets look like Mass St. now.

How about an actual grocery store (not just organic)? How about an electronics store?

jafs 2 years, 10 months ago

And, why is it that free market forces aren't forcing those rents down?

Boston_Corbett 2 years, 10 months ago

I have been told by some (who own) that some lease rates are indeed coming down. Slowly, but coming down.

But the future of general and specialty bricks-and-morter stores is going to continue to be challenging in locations with high lease costs as larrynative suggests.

AMC5546 2 years, 10 months ago

I've recently started tracking and counting the vacancies round about town. It's the ghost-townification of Lawrence! emptylawrence.blogspot.com

Richard Heckler 2 years, 10 months ago

How to reduce the Lawrence retail vacancy rate?

Convert some large areas of retail to light industrial such that was done with Tanger Mall.

Colliers wants to create this rosy image in hopes of attracting new retail to fill their vacancies. The bottom line = the availability of retail dollars has not increased in fact is probably less than was available one year ago.

People are still losing jobs and houses are still being foreclosed.

Richard Heckler 2 years, 10 months ago

"And, why is it that free market forces aren't forcing those rents down?"

Because some feel Lawrence is worth more than it is = inflated rents.

volunteer 2 years, 10 months ago

One of the empty building owners on Mass told me he discussed the issue of rents with several other empty building owners and they decided to stick to the high rents on the theory that the economy will rebound eventually.

I miss the privilege of paying two bucks extra for dental floss at Round Corner Drug. But after you eat lunch, sometimes you are willing to pay extra to get the barbecue out of between your teeth.

jafs 2 years, 10 months ago

There must be some sort of tax advantages they get on vacant properties, otherwise there's an obvious financial incentive to lower rents immediately and get tenants.

How long can they simply let their buildings remain vacant, if they're not getting any rent?

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