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As planners debate Menards project, new study finds retail vacancy rate at 7.2 percent citywide


Let the number games begin. As we’ve previously reported, the Lawrence-Douglas County Planning Commission is set to debate a proposal by Menards to locate a new store adjacent to Home Depot near 31st and Iowa streets.

As we’ve also reported, one of the factors that planners are supposed to take into consideration when considering such large retail projects is the city’s retail vacancy rate.

But at the time Menards filed its plans with City Hall, the last time the city had conducted a retail vacancy rate study was in 2010.

Well, there are now new numbers. The city recently has completed its most recent Retail Market Report, which looks at vacancy rates as they were in December 2012. Here’s a look at some of the findings:

• Citywide, the retail vacancy rate was 7.2 percent, down from the 7.3 percent found in the city’s 2010 report and up from the 6.9 percent found in the 2006 report. In other words, there hasn’t been much change in the overall number.

• Downtown had a vacancy rate of 9.4 percent, up from 9.1 percent in 2010; South Iowa had a vacancy rate of 7.8 percent, up from 2.7 percent; East 23rd had a vacancy rate of 10.4 percent, down from 13.6 percent; West 23rd Street had a vacancy rate of 6.1 percent, down from 6.7 percent.

• The 19th and Haskell area had the highest vacancy rate in the city at 30.2 percent. North Lawrence was second at 16.4 percent, although the numbers indicate a turnaround is happening in the area. In 2010, it had a vacancy rate of 27.5 percent.

• Turnarounds happened in a couple of other areas too. The Bob Billings Parkway and Wakarusa area has a vacancy rate of 7.8 percent, down from 26.4 percent in 2010.

• The report also provides information about the type of retail uses in downtown. The report found 116 merchant-based retail businesses in downtown, which is down from 126 in 2006. Restaurant and beverage oriented uses grew to 83, up from 68 establishments, during the same time period.

The report is an interesting one for people who watch Lawrence’s commercial real estate market. Perhaps the most interesting part about it, though, is how different it is from a private report that was put together during roughly the same time period.

The Lawrence office of Colliers International released a report in January that measured vacancy rates for late 2012. It found an overall retail vacancy rate of 5.4 percent, compared to 7.2 percent in the city’s report.

In downtown, Colliers found a vacancy rate of 4.4 percent compared to 9.4 percent in the city report.

The differences, I believe, come down to the methodology of the two reports. I don’t know all the differences but I think a lot of it comes from how the two studies define retail space. For example, the city study counts some industrially zoned space as potential retail space because the city’s development code would allow for retail to be located in the space. Also, there are places like the former Riverfront Mall building. Whether that space is counted as retail space, which is what it was built for, or office space, which is how it is pretty much being marketed now, makes a difference in the vacancy rate calculations.

Vacancy rates: They’re like my kids saying they’ve “cleaned” their rooms. It is a subject where interpretations and definitions matter.

As far as the Menards project goes, we’ll see how much weight planners, and ultimately city commissioners, give to the vacancy rate subject.

The city’s comprehensive plan, Horizon 2020, says large retail projects shouldn’t be approved, if there is evidence the project will push the city’s overall retail vacancy rate above 8 percent.

If the 190,000 square foot Menards store and the 65,000 square feet of outlying parcels — restaurants and other smaller retailers surrounding the store — were built and then were entirely vacant, the city’s vacancy rate would rise to 9.7 percent. It would be odd, however, for Menards to build a store and then not occupy it, but technically that is the assumption city planners are supposed to make under the rules of Horizon 2020.

Several planning commissioners the last time they considered this issue, however, indicated concern with making that type of assumption. The city also is in the process of rewriting that portion of Horizon 2020, but those changes haven’t yet been made. So, it is possible that planners may discard the idea that they should assume the new Menards building will be vacant after it is built.

Staff members put together another calculation that shows what would happen if the Menards building is occupied but all of the 65,000 square feet of surrounding retail is vacant. The result would be the citywide vacancy rate would rise to 7.7 percent, which is still below the 8 percent threshold that Horizon 2020 says is critical.

So, we’ll see what comes of all this. I’m not sure how much this retail market study is going to play into the Menards decision, but this report likely will play into future debates about whether Lawrence has too much or too little retail space for a community its size.

The Menards discussion will take place at 6:30 tonight at City Hall.


Shane Garrett 4 years, 11 months ago

Nothing is wrong with a 7.2 vacancy rate. The entire country has a 7.5 unemployment rate and nobody is complaining. Or are they?! In 2007-2010, Manhattan area had a 5.8%, average commercial vacancy rate; nearly five percentage points below the Kansas and National rates during the period.

irvan moore 4 years, 11 months ago

yep, that's my question too plus I wonder if they know the apartment vacancy rate now

bornherelongago 4 years, 11 months ago

The national retail vacancy rate is over 11%. Who decided 8% would be the watermark? And the policy about assuming a project will be vacant after it is built is embarrassingly idiotic.

just_another_bozo_on_this_bus 4 years, 11 months ago

I'd guess that it's even higher than 11% in places like Detroit. Should we try to meet or exceed their vacancy rate?

lawrence267 4 years, 11 months ago

Any idea why they only included ground floor businesses downtown? I'd be interested to see what the breakdown of those would be.

Richard Heckler 4 years, 11 months ago

America Is Over Stored ( Do Lawrence,Kansas planners,Chamber of Commerce and city government not realize this?)

The Wall Street bankers boom town economics building frenzy produced a bumper crop of new retail space. But the occupants haven't materialized.

The carnage in retail hasn't been this bad since an anarchist bombed Chicago's Haymarket Square in 1886.

But back out inflation and sales of gasoline, and retail sales fell in real terms in the past year. Clearly, demand is down.

In the fourth quarter of 2007, the national retail-vacancy rate rose for the 11th straight quarter to 7.5 percent—the highest level since 1996, according to research firm Reis, Inc.

http://www.newsweek.com/id/112762 (In essence the retail dollars are simply NOT available)

Chris Phillips 4 years, 11 months ago

Unemployment rate and Vacancy rate....comparing them is like comparing oranges and lemons. They are both related, but not as a one to one ratio comparison.

Shane Garrett 4 years, 11 months ago

I was not trying to compare the two as equal equations. I am saying that the equal percentages, while are related, need to be addressed to make both better. Higher employment usually results in more business, making vacancy smaller. The community needs to be focused on bringing in good jobs from solid companies. This requires good city management.

Richard Heckler 4 years, 11 months ago

Menard's next door to Home Depot = dumb economics = will eventually leave Lawrence with one home improvement store again and one large empty structure not providing employment,income taxes or sales taxes. There are no guarantees property owner will keep property taxes paid.

Taxpayers grab your wallets.

LogicMan 4 years, 11 months ago

None of the big boxes on southern Iowa has ever been vacant for long. Even the original Walmart and Kmart buildings.

LogicMan 4 years, 11 months ago

Also the Wards and Gibsons buildings. Food-4-Less let the Gibsons building sit unused for a few year, but I heard they were still paying their rent so technically it wasn't vacant.

Richard Heckler 4 years, 11 months ago

The former home improvement store sat vacant for years. Sears is still vacant.

It's not about Menard's it's about having one or the other cuz both cannot survive because the dollars are NOT here.

It's vacant IF no jobs or sale tax reveue or other tax revenues are not being generated. Empty buildings are NOT GOOD for the Lawrence economy..... rule of thumb.

The K-Mart building sat vacant for a long time.

George_Braziller 4 years, 11 months ago

That sad shopping center needs to just be bulldozed and re-built. It's poorly designed, not well maintained and has always had a problem keeping tenants. We rented offices there until 1998 when we moved. The roof and windows leaked every time it rained, the furnace and AC were constantly on the fritz, the parking lot always had craters in it, and the place was infested with cockroaches. Even then it was a depressing place to work and it hasn't improved with time

• The 19th and Haskell area had the highest vacancy rate in the city at 30.2 percent. North Lawrence was second at 16.4 percent, although the numbers indicate a turnaround is happening in the area. In 2010, it had a vacancy rate of 27.5 percent.

Richard Heckler 4 years, 11 months ago

Lawrence does have other choices...

Cottins Hardware 1832 Massachusetts St Lawrence, KS 66044 (785) 843-2981

McCray’s Lumber 1516 W 6th St Lawrence, KS 66044 (785) 843-3270

Earnst Hardware 826 Massachusetts St Lawrence, KS 66044 (785) 843-2373

I do shop all three of the user friendly above and Home Depot if I cannot find what I need at the above locations.

Mark Currie 4 years, 11 months ago

I DO know something about tools, and I'll pass on Menards. Was in the one in Topeka. They can have it. I know Home Depot isn't the greatest, but I hate to see them go out for a Menards. There are places in Lawrence to get quality tools besides Home Depot. We have hardware stores, Automotive supply stores, and the internet. Most of the builders I know do not buy from any of those places, but have specialty suppliers. I am all for bringing more business to Lawrence, but not at the expense of one that is already here and established. Oh well, whatever.

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