Despite threats from online shopping, study finds Lawrence retail vacancy rates held steady in 2019

photo by: Mike Yoder/Journal-World File Photo

The 800 block of Massachusetts Street is pictured on Nov. 17, 2015.

The threat of online retailers certainly didn’t subside any in 2019, but Lawrence’s retail market remained pretty stable throughout the year anyway, according to a new report from the local office of commercial real estate firm Colliers International.

The vacancy rate of retail spaces around the city declined just slightly for the year, and despite what seemed like a large amount of turnover in downtown Lawrence, that key shopping district also was relatively steady.

Positive economic news on the national front helped stabilize the Lawrence market, Kirsten Flory, an associate at Colliers International, said at a Thursday evening commercial real estate event in downtown Lawrence.

“Consumer confidence was high, and interest rates remained low,” Flory said, which helped 2019 be one of the more active years for deal volume in Lawrence.

The report, though, wasn’t all positive. Lawrence’s retail vacancy rate is higher than both the Kansas City and national averages, while the city’s office vacancy rate also was higher than the Kansas City average. Lawrence underperforming the Kansas City and national averages has been a recent trend. Historically, Lawrence long had vacancy rates lower than the Kansas City and national averages. This marks the third year in a row that Lawrence’s retail vacancy rate has been higher than both the national and Kansas City averages.

The health of the retail market, particularly the downtown market, has been a topic of conversation for community leaders recently. A draft version of a comprehensive plan for downtown suggests the downtown area should plan for fewer traditional retailers in the future, with larger numbers of businesses selling experiences.

Flory said she was pleased to see that recommendation in the draft plan because it is a trend that is gaining traction, especially as more traditional retailers struggle to compete with online retailers. Lawrence sales tax collections showed evidence that the pace of online buying picked up considerably in 2019. Collections of use taxes, which are charged in lieu of traditional sales taxes for online purchases, were up 17% compared with 2018 totals.

“I think downtown probably is at the top of all our minds in regards to what is happening and how the market is evolving,” Flory said. “But I think there are a lot of positive things happening in downtown.”

Colliers’ vacancy study found that retail vacancy rates in downtown at the end of 2019 basically were unchanged from a year ago. The district finished the year with a 7.6% vacancy rate in 2019 compared with 7.68% in 2018. The total amount of vacant retail space in downtown was about 95,000 square feet, compared with just under 100,000 square feet in 2018.

Downtown’s vacancy rate of 7.6% ranked it as the fourth highest out of the eight retail districts that the report tracks. The others:

• Sixth Street corridor: 12%, which is up from 5.25% last year. The closing of the Hy-Vee grocery store at Sixth and Monterey Way caused a spike in the area’s vacancy rate.

• West 23rd Street: 10.6%

• East 23rd Street: 7.9%

• Downtown: 7.6%

• Alvamar and Bob Billings Parkway corridor: 5.9%

• University district: 5.3%

• South Iowa Street: 4.0%

• North Lawrence: 2.2%

Lawrence’s overall retail vacancy rate was 6.6% compared with 6.8% in 2018. The Kansas City average is about 5.5%, while the national average is just under 4%, according to the Colliers report.

Some other findings from the report:

• Lawrence’s overall office vacancy rate was 10.4%, down from a recent high of 12.1% in 2018. Kansas City’s average for office vacancy is just above 8%, while the national average is just over 11%.

• Downtown continues to have a high office vacancy rate thanks to two large vacant properties, one on each end of downtown. The Allen Press property near 11th and Massachusetts streets and the former Journal-World printing plant near Sixth and Massachusetts both were empty all year, continuing a multiyear trend. Those properties have downtown’s office vacancy rate at 23.9%, which is down from 28.4% last year. Apart from those properties, the report said demand for office space downtown has been strong as more companies want to be next to downtown’s dining, shopping and apartments as they try to recruit employees to the area.

• Industrial vacancy was at 3.1% at the end of 2019. That’s basically unchanged from the 3.2% rate in 2018. Lawrence is well below the national and Kansas City averages, which range from 5% to 6%. Lawrence’s industrial vacancy rates are low despite the empty industrial building in the VenturePark industrial area on the eastern edge of town. A Kansas City firm constructed that building on speculation with the hopes that tenants would follow. The building was completed in late 2018 but doesn’t yet have a tenant. The report, however, alluded to some activity, saying “lease negotiations are pending on the first tenant.”


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