Pandemic pushes retail vacancy rates in downtown Lawrence to historically high levels, report shows

photo by: Nick Krug

A cashier hands a receipt back to a customer after a purchase at Lawrence's Sunflower Outdoor and Bike Shop in this file photo from July 6, 2017.

Everybody knows that the pandemic battered some of our favorite businesses in 2020. Now, we are getting one of our first glimpses at just how many. The answer in downtown Lawrence is: A historically high number.

Downtown Lawrence’s retail vacancy rate at the end of 2020 was 12.5%, according to the annual report from the commercial real estate firm Colliers International, which operates an office in Lawrence.

That’s certainly the highest vacancy rate in recent memory. There is not really an official list of vacancy rates for downtown over the years, but I’ve covered lots of these reports and don’t have any info in my past years’ notes to show a higher rate. Maybe in the downturn of the 1980s there were vacancy numbers this high, but I don’t know. (I wasn’t writing about vacancy rates in the 1980s, but rather was busy vacating rooms with my super cool high school mullet.)

The high rate isn’t a surprise, given the disruption of the pandemic. The retail category is broad and includes restaurant space, so logic dictated there was going to be an increase. The 12.5% vacancy rate for downtown is up from 7.6% in 2019. There is a little more than 140,000 square feet of retail space vacant in downtown. That’s the highest of any commercial district in Lawrence. At the end of 2019, there was about 95,000 square feet of vacant space in downtown, according to past reports.

For some context, downtown vacancy rates have been in that 7% range for the last two or three years. They also were in the 7% range after the Great Recession, my records show. By 2014, vacancy rates had improved all the way to the 3% range, and were in the 5% range in 2015. What that means, though, is the general trend in the last half of the decade has been a rising downtown vacancy rate.

This new high sure doesn’t look good on the chart, but Colliers’ top commercial broker in Lawrence said the situation feels a little better on the ground.

“Downtown actually is looking much better behind the scenes,” Allison Vance Moore, the Lawrence-based senior vice president for Colliers, said.

Moore said there is activity in the works with some tenants of buildings now working to purchase those buildings downtown. That could pay long-term dividends for downtown, as my observations have been that businesses who own their own buildings are better positioned to withstand some downturns. Moore also said there are new businesses looking to enter the market “now that they understand how to reach their customers during a pandemic.”

Indeed some signs of that activity are starting to show up. I’ve got an article coming up on a new seafood restaurant that will be opening in the coming weeks at 10th and New Hampshire streets, for instance.

“It’s not nearly as scary as it appears,” Moore said of the spike in vacancy rates.

The downtown area isn’t the only commercial district to see a spike in its retail vacancy rate.

Colliers International published its annual report on vacancy rates for the Lawrence retail market, and it shows big jumps in vacancy rates for some of the city’s more active retail districts.

Downtown Lawrence certainly has felt more vacant this year. The Sixth Street corridor stretching into northwest Lawrence actually has the highest retail vacancy rate, and the East 23rd Street corridor also has double-digit vacancy rates. South Iowa, home to the big box stores in town, saw vacancy rates decline. Here’s a look at retail vacancy rates for some of the major shopping districts in the city.

• Sixth Street: 15.2%, up from 12% in 2019;

• Downtown: 12.5%, up from 7.6%;

• East 23rd Street: 10.6%, up from 7.9%:

• West 23rd Street: 8.7%, down from 10.6%;

• Alvamar and Bob Billings Parkway corridor: 5.8%, down from 5.9%;

• South Iowa Street: 3.4%, down from 4%

• University district: 2.7%, down from 5.3%

• North Lawrence: 1.9%, down from 2.2%

The city’s overall retail vacancy rate was 7.4%, which is up from 6.6% at the end of 2019. Lawrence had about 490,000 square feet of vacant retail space throughout the city. Lawrence’s retail vacancy rate is higher than both the Kansas City average and the national average, perhaps showing that university communities have been hit particularly hard by the pandemic, as they’ve seen their populations drop because of altered class schedules. Colliers lists the K.C. vacancy rate at about 5.5% and the national average at about 5%.

The Colliers report measured several other types of commercial vacancy rates for Lawrence. Here’s a look:

• The vacancy rate for office space in Lawrence was 10.1%, down from about 10.4% in 2019. Downtown has the highest amount of vacant office space in the city — by far — in terms of both total square footage and vacancy rate. Downtown’s office vacancy rate is at 24%, with just over 200,000 square feet of space available. The Sixth Street corridor has about 50,000 square feet available, with about a 6.7% vacancy rate. Lawrence’s office vacancy rate falls between the K.C. and national averages. The U.S average is about 13%, while the K.C. average is about 9.5%, according to Colliers.

• Industrial space in Lawrence had a vacancy rate of 3%, down from 3.2% at the end of 2019. The market continues to be short on smaller industrial space for 10,000- to 15,000-square-foot users, according to the report. Efforts continue on finding tenants for the speculative industrial building — the VanTrust building — that was built in VenturePark near 23rd and O’Connell Road. The building landed its first tenant in 2020 — warehouse space for health care manufacturer Plastikon — the report said the building “has struggled to land additional tenants with a current minimum occupancy requirement of 22,000 square feet. Most demand at VanTrust has been closer to the 10,000 to 15,000 square foot range.”

Construction work, however, is underway on two new industrial buildings in VenturePark. One will be occupied by U.S. Engineering, which will use the facility to make various components for HVAC systems. The second building is being constructed by snack food maker Pretzels Inc. If you have driven by the 23rd and O’Connell intersection in the last couple of weeks, you’ve surely noticed that building has come out of the ground in a hurry. The prefabricated walls for the large building are mostly up. The company expects to start moving into the building this summer and start producing snack foods here by next year. The plant is expected to employ about 280 people within five years.


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