City’s retail vacancy rate up slightly, but still below Kansas City, national average
Lawrence saw increased vacancies in retail spaces in 2015, especially downtown, but the city’s vacancy rate still remained well below the Kansas City metro area’s rate and the national average, according to an annual study of such data.
A new commercial real estate report by the Lawrence office of real estate organization Colliers International found the city’s retail vacancy rate was 4.3 percent at the end of 2015 — up from 3.9 percent the year prior. Kansas City’s vacancy was reported at more than 7.5 percent, and the national average is about 5.5 percent.
“Retail remained strong and consistent with vacancy increasing ever so slightly,” said Allison Vance Moore, a senior vice president with Colliers. “Overall, 2015 was a very healthy and strong year in commercial real estate, and that momentum is continuing as we start 2016.”
Though the overall vacancy rate increased only slightly, the closely watched downtown rate nearly doubled, jumping to 5.38 percent from 2.7 percent at the end of 2014.
Moore attributed the high vacancy rate to the Lawrence Public Library vacating the old Borders building, as well as the still-empty M&M Office Supply. The report shows there is about 70,000 square feet of empty retail space downtown — the second highest square footage available by sector, after south Iowa Street.
“Other than these two sizable projects, the balance of downtown remains healthy with otherwise low vacancy,” Moore said.
Because Lawrence is forecast to have a limited supply of overall empty retail space available in 2016, Moore said there’s an expectation to see occupation of the former M&M Office Supply and Borders buildings this year.
Both Moore and Joe Flannery, president of Weaver’s, said during a Colliers forecast event Thursday that ongoing apartment projects would boost downtown retail.
Flannery said the current condition of downtown has “never been brighter.”
He listed ongoing and recently finished projects, such as TownePlace Suites at Ninth and New Hampshire streets, The Eldridge expansion, the East Lawrence Project and apartment projects at Eighth and New Hampshire and Ninth and New Hampshire, saying, “we’ve never had this many projects going on at one time.”
“There’s a lot of excitement and energy,” Flannery said. “It’s advantageous to retailers.”
Dana Anderson, a longtime leader of The Macerich Company who said he’s invested in some downtown apartment projects, also weighed in on the state of Lawrence’s downtown.
Anderson said city leaders should “do all they can to encourage residential development downtown” because it will help retail and restaurant sales. That sentiment was echoed by Moore.
“The additional investment and expansion in downtown with the focus on more residential units will continue to drive demand forward for retail services and entertainment, all of which combines to keep a downtown vibrant and healthy,” she said.
The vacancy rate on south Iowa Street also increased in 2015, up to 4.56 percent from 3.8 at the end of 2014. It also had the most available square footage of any other area, with slightly more than 100,000 square feet. Colliers forecast that more redevelopment would happen in that area of the city in 2016.
The highest vacancy rate was on East 23rd Street, which was reported as having a 12.33 percent vacancy rate and about 40,000 square feet of empty space. The vacancy rate is up from 11.5 at the end of 2014.
Because of the low overall vacancy rates, space is tight, Moore said. The low rates, coupled with increased interest from new retailers, could mean new sites need to be developed.
The report also included office and industrial vacancy rates.
• The industrial vacancy rate fell to a historic low of 3.49 percent in 2015, down from 6.1 percent at the end of 2014. Moore said new and expanding industrial businesses might struggle to find space this year, and, with the limited inventory, that kind of property would see rent increases.
• The office vacancy rate ended 2015 at 8.79 percent, which is down from 9.6 a year ago and its lowest rate in more than a decade. Downtown had the highest office space vacancy rate, at 16.31 percent, but the report forecasts most of that will be absorbed in 2016.