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Q12011 Columbus Retail Market Report

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  • 1. Q1 2011 | RETAILGREATER COLUMBUS REGIONRETAIL TRENDS REPORT Connect Four COLUMBUS REGION OVERVIEW The Columbus retail market finished the first quarter 2011 with a sizable positive absorption of 198,898 square feet. This marks the fourth consecutive quarter of positive absorption for retail space. The retail market is strengthening regionally and nationally with the National Association for Business Economics reporting that more companies than at any time since 1994 reported sales gains in the first quarter. In December, the employment rate was at 7.7 percent but has since picked up to 8.5 percent in January and then dipped to 8.2 percent. Consumers are sure to be out in force asMARKET INDICATORS employment continues steady upward trends. Continued on page 2... Q1 Q2 FORECASTS AND REFLECTIONS 2011 2011* VACANCY • The retail vacancy rate improved from 11.9 were only two quarters with significant percent by 4 basis points to 11.5 percent. The negative absorption. Since the recovery began NET ABSORPTION retail market has experienced a year of there have been no quarters with negative positive absorption. absorption. The Columbus retail market was CONSTRUCTION — — • The 56,000-square-foot big box, Hobby Lobby very resilient in the past three years. RENTAL RATES — has been completed at Polaris shopping Mall. *Projected change to following quarter Phase one of the Grandview Yard construction project has been completed. • Through two years of the recession there RENTAL RATESERRATIC BEHAVIOR VACANCY RATE OVER COMPLETIONS AND ABSORPTIONSAsking Rates Average asking rental 1,200,000 13.5% rates increased in strip, $16.00 community, and power 1,000,000 property types. There Completions and Absorptions 13.0% $14.00 800,000 was a significant 600,000 increase in the average Rental Rates 12.5% Vacancy Rate $12.00 400,000 asking rental rate for 200,000 12.0% properties of the power $10.00 subtype because a few 0 11.5% properties are no longer $8.00 ‐200,000 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q listing very low teaser 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 08 08 08 09 09 09 09 10 10 10 10 11 08 08 08 08 09 09 09 09 10 10 10 10 11 ‐400,000 rates, which is a good 11.0% Strip Neighborhood Community ‐600,000 sign for the market. ‐800,000 10.5% Completions Absorption Vacancy Ratewww.colliers.com/columbus
  • 2. RESEARCH & FORECAST REPORT | Q1 2011 | RETAIL | GREATER COLUMBUS REGION Delaware County LANDLORDS in transition. The market in the first quarter Union County Landlords are not out of the woods yet but they experienced slightly more than 420,000 square may be able to see the forest for the trees. feet of square footage in transition. This is less North / Northeast Licking Leasing has been strong in most markets for than the first quarter numbers for 2008-10 by an Northwest County most quarters in the past year. While there are average of 150,000 square feet. This means the enough tenants to get the market moving there loss of retail tenants has slowed significantly CBD isn’t enough for competition to spark an increase from third quarter 2010 to first quarter 2011.MadisonCounty in asking rental rates. Southeast Southwest CONSTRUCTION Fairfield County TENANTS Menard’s construction on Morse Road will be Pickaway County Sales are increasing generally across the board completed in early second quarter 2011. The but the danger of having to pass on the increased Kingsdale Shopping Center in Upper Arlington in agricultural and transportation costs to the Northwest submarket is wrapping up theThe Columbus retail market includes 11 consumers may slow decisions to move into newsuburban submarkets and the Central final phases of construction and renovation and markets. should begin leasing the new strip space.Business District. A total inventory of 55million square feet of space with only 1million of that space in the CBD. Credit remains tough but the capital faucet locally New construction began in late 2010 for a for small businesses has been loosened with 44,000-square-foot Rave movie theatre next to local banks committing to small business lending. the 55,000-square -foot Hobby Lobby Project in Job growth in the region has been good. Grove City. The construction of Hobby Lobby was completed in Polaris. MARKET ACTIVITY The story for the quarter is quieter than average market activity. Market Volume Activity is the absolute value of the absorption in each building and it gives us a measure of how much space is UPDATE New Supply, Absorption and Vacancy Rates SALES ACTIVITY PROPERTY ADDRESS SALES DATE SALE PRICE SIZE SF SALES PRICE / SF TYPE 2700 Corporate Exchange Jan 2011 $9,550,000.00 174,737 $54.65 Hotel Drive 2631 Morse Road Feb 2011 $1,212,500.00 37,500 $32.33 Commercial 1309 St James Lutheran Jan 2011 $1,237,000.00 34,192 $36.18 Strip Center Way 2885 Gender Road Jan 2011 $1,500,000.00 33,146 $45.25 Free-standing 3506 Gender Road Jan 2011 $1,320,000.00 11,197 $117.89 Free-standing LEASE ACTIVITY PROPERTY ADDRESS LESSOR LESSEE LEASE SF ASKING PRICE / SF (NNN) TYPE 6644-6804 Perimeter DDR CONTINENTAL L P Giant Eagle 19,154 N/A Neighborhood Center Loop Road 1800-1942 W. Henderson Suburban Centers Inc Volunteers of America 18,281 $12.00 Strip Center Road 1627-1787 Olentangy Lennox Town Center Bravo Italian Eatery 9,000 N/A Power Center River Road Limited 8457-8497 Sancus Polaris Sancus Retail Llc Title Boxing Club 7,034 $12.50 Neighborhood Center Boulevard 3861 Park Mill Run Drive CNL INCOME & GROWTH Lunada 6,894 $12.50 Free-standing FUND VII LTDP. 2 | COLLIERS INTERNATIONAL
  • 3. RESEARCH & FORECAST REPORT | Q1 2011 | RETAIL | GREATER COLUMBUS REGIONUPDATE Market ComparisonsRETAIL MARKET Net Absorption Construction Asking Rental RatesSUBMARKET Total SF Vacant SF Vacancy % Current Quarter Year-to-date Current Completions Neighborhood PowerCBD 986,975 56,049 5.68 (7,956) (7,956) - - - -FAIRFIELD 3,418,174 438,567 12.83 6,200 6,200 - - $9.89 -LICKING 3,250,240 314,767 9.68 8,037 8,037 - - $9.43 -MADISON 443,304 5,285 1.19 - - - - $10.00 -NORTH DELAWARE 1,780,118 288,257 16.19 10,608 10,608 - - $12.75 -NORTHEAST 15,137,808 1,049,418 6.93 60,263 60,263 240,000 - $13.30 $12.50NORTHWEST 12,761,732 1,095,154 8.58 55,842 55,842 245,647 - $13.97 $20.00PICKAWAY 694,724 10,967 1.58 - - - - $8.50 -SOUTHEAST 9,459,758 1,331,329 14.07 29,149 29,149 109,000 - $10.51 $19.50SOUTHWEST 6,806,523 1,799,034 26.43 38,371 38,371 - - $8.08 $22.00UNION 1,157,257 511,02 4.42 (4,525) (4,525) - - - $18.00TOTALS 55,896,613 6,439,929 11.52 195,989 195,989 594,647 - $11.46 $17.89 Net Absorption Construction Asking Rental RatesPROPERTY TYPE Total SF Vacant SF Vacancy % Current Quarter Year-to-date Current CompletionsCOMMUNITY 8,999,075 1,184,644 13.2 18,491 216,913 - - $14.14FREE-STANDING 7,656,757 569,248 7.4 75,446 134,374 340,000 - $9.70NEIGHBORHOOD 17,405,444 2,467,282 14.2 (42,967) (176,097) 254,647 - $11.46OTHER 27,000 4,610 17.1 0 (248) - - -OUTLET 184,000 0 0.0 0 0 - - -POWER 5,016,555 453,920 9.0 3,765 34,336 - - $17.88REGIONAL 3,828,626 536,515 14.0 0 55,430 - - $10.97SPECIALTY 250,000 37,938 15.2 13,316 8,523 - - -STRIP 5,498,921 755,167 13.7 (2,743) (15,679) - - $13.32SUPER REGIONAL 6,530,997 648,155 9.9 (7,500) 2,554 - - -URBAN 621,975 5,545 0.9 0 14,412 - - -TOTALS 55,896,613 6,439,929 11.52 195,989 195,989 594,647 -QUARTERLY COMPARISON AND TOTALS Net Absorption Construction Asking Rental RatesQUARTER, YEAR Total SF Vacant SF Vacancy % Current Quarter Year-to-date Current Completions Neighborhood PowerQ4, 2010 56,019,350 6,663,024 11.9 57,808 274,518 541,647 110,000 $11.05 $12.50Q3, 2010 56,019,350 6,720,832 12.0 236,129 216,710 595,647 176,250 $11.68 $14.57Q2, 2010 55,843,100 6,950,296 12.4 197,025 (19,419) 771,897 - $12.71 $12.56Q1, 2010 55,843,100 7147321 12.8 (216,444) (216,444) 727,438 - $10.84 $10.37 DATA SET The retail statistics are derived from a data set comprising all 20,000 square foot and above buildings in the Columbus MSA. COLLIERS INTERNATIONAL | P. 3
  • 4. RESEARCH & FORECAST REPORT | Q1 2011 | RETAIL | GREATER COLUMBUS REGIONCBD FUNDAMENTALSThe Central Business District (CBD) incurred7,956 square feet in negative absorption and The U.S. retail sector has shown good growth over the quarter. Three sources are instructive 480 offices inincreased the vacancy rate to 5.6 percent. for retail consumer activity. First, the consumer 61 countries onNotable movement downtown this quarter was confidence index, the second is a weekly pollthe vacancy of Dunkin Donuts with Tim Horton’s conducted by Gallup, and the third is the Beige 6 continentsat 8235 N. High Street. Book produced by the Federal Reserve Bank United States: 95 semi-quarterly. Canada: 17 Latin America: 17NORTH The consumer confidence index is produced by Asia Pacific: 52The north submarkets include Northwest, The Conference Board and is a survey of how EMEA: 85Northeast, and North Delaware. The Northeast confident consumers are in the current economic • $1.6 billion in annual revenuesubmarket has been the strongest performing conditions by their spending and saving habits. • 672.9 million square feet undermarket with more than 60,000 square feet of In March, the index was 63.4 decreasing by managementabsorption. The Northwest submarket has also roughly 900 basis points from 72.0 in February. • Over 10,000 professionalsbeen a strong performer this year with more In January the index had improved to 53.2 fromthan 55,000 square feet of positive absorption. 48.5 in December. The index was 112.5 in July GREATER COLUMBUS REGION 2007, six months before beginning of the Richard B. Schuen SIOR CCIMSOUTH recession. CEO | Principal | Columbus 8800 Lyra DriveThe southern submarkets are Southeast and Gallup’s consumer spending measure tracks the Suite #150Southwest. Following last quarter’s recovery average dollar amount Americans report Columbus, Ohio, 43240these two submarkets performed really well. spending or charging on a daily basis, not TEL +1 614 410 5612The Southeast gained 29,149 square feet and the counting the purchase of a home, motor vehicle, FAX +1 614 410 3312Southwest recorded 38,371 square feet of or normal household bills. Over the three monthpositive absorption. The majority of net loss for Leslie Hobbs period between January and March the 14-day Marketing and Research Managerthe entire retail market came from these two rolling average fell from $80 to $61 with a high 8800 Lyra Drivesubmarkets, where together more than 160,000 of $70 on March 9. The high mark of the 3-day Suite #150square feet was vacated in first quarter 2011. rolling average was on March 11, the day of the Columbus, Ohio, 43240 first earthquake and tsunami in Japan. TEL +1 614 410 5640EAST FAX +1 614 410 3310The east submarkets are Licking and Fairfield The Cleveland Federal Reserve reports on Jonathan BadgleyCounties. Fairfield County experienced a small consumer spending twice a quarter in the Beige Research Analystuptick with 6,200 square feet of space. Licking Book. The data for these reports comes from 8800 Lyra Drive qualitative surveys of retailers in the fourth Suite # 150County also experienced a small increase in district, which includes Columbus. In March, the Columbus, Ohio, 43240absorption with 8,307 square feet. TEL +1 614 410 5652 reserve bank reported that post-holiday retail FAX +1 614 410 3327 sales were generally higher than year-ago levelsWEST or ahead of plan. Some retailers said that theyThe west submarkets include Union and Madison plan on increasing capital spending during 2011Counties. Low population in these submarkets for new stores, distribution centers, andmeans that competition between retailers is less e-business expansion, with corresponding risefierce than higher populated areas of Columbus. This document/email has been prepared by Colliers in payrolls. In April, retailers reported that overSubsequently, the vacancy rates are low because International for advertising purposes. Colliers the past 6 weeks sales were again generally International statistics and data are audited annually andthe retail offering is already maximized relative may result in revisions to previously reported quarterly higher than year-ago levels. Retailers hadto population. Madison County remained and final year-end figures. Sources include Columbus concern about increased prices from vendors, Dispatch, Business First, Xceligent, Wall Street Journal,unchanged. Bureau of Labor Statistics, Bureau of Economic which were primarily attributed to a rise in the Analysis, Gallup, and the Cleveland Federal Reserve. cost of agricultural commodities. No change in employment is expected at existing stores. Accelerating success.www.colliers.com/columbus