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Q2 Columbus Retail Market Trends

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  • 1. Q2 2012 | RETAILGREATER COLUMBUS REGIONRETAIL TRENDS REPORT Methodical Growth COLUMBUS REGION OVERVIEW The Columbus retail market returned to positive growth with 110,000 square feet adding to the recent trend that eight of the last nine quarters that have seen positive absorption. The largest leases were Habitat For Humanity leasing 25,000 square feet at 166 Wilson Road in the Southwest submarket, and TJ Maxx leasing 25,000 at 911 Central Parkway in Licking County.MARKET INDICATORS FORECASTS AND REFLECTIONS • The only investment sale was The Shops at Secur-it Personal Storage building downtown, Q2 Q3 Avery Place in Dublin, which sold for $5 which will become a 70-unit apartment, and 2012 2012* million. the Fireproof Building in the Short North • Multifamily construction is booming in the which will house 58 units when completed. VACANCY CBD and nearby portions of other submarkets. These residential moves will certainly increase NET ABSORPTION The former Wonder Bread Factory is being the need for retail in the CBD. converted into 56 apartments. The Aston • Construction at Cabela’s, a large outdoor CONSTRUCTION — Place apartment complex at the corner of retailer, is currently underway with an RENTAL RATES — — West Third and Dennison Avenues began a 80,000-square-foot store that will employ 175 59-unit project, and Kaufman Development full- and part-time employees. It is expected to *Projected change to following quarter LLC will begin a five-story, 174-apartment be completed by end of the year. Construction project on Goodale Street along the Olentangy of the space comes on the back of the The River. Also under development is the former Great Indoors closing at Polaris. RENTAL RATESBIG BOX SURGE VACANCY RATE OVER COMPLETIONS AND ABSORPTIONS The average asking rentalAsking Rates  1,200,000 14.0% rates for centers $16.00  1,000,000 decreased. Anchored 12.0% Completions and Absorptions $14.00  800,000 strip and neighborhood  600,000 10.0% spaces were flat, while $12.00 big box space has Vacancy Rate  400,000 8.0% $10.00  200,000 continued to show rates 6.0% increasing.  $8.00  ‐  (200,000) Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 4.0%  $6.00 08 08 08 09 09 09 09 10 10 10 10 11 11 11 11 12 12  (400,000) 2.0%  $4.00  (600,000) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 08 08 08 08 09 09 09 09 10 10 10 10 11 11 11 11 12 12  (800,000) 0.0% Anchored Strip Neighborhood Community Big Box Completions Absorption Vacancy Ratewww.colliers.com/columbus
  • 2. RESEARCH & FORECAST REPORT | Q2 2012 | RETAIL | GREATER COLUMBUS REGION CONSTRUCTION exactly happened to the market behind the Delaware County A 30,000-square-foot community center at absorption number. The Market Activity Volume Union County 4020-4060 Powell Road, called Liberty Crossing, was more than 475,000 square feet. This is North / is no longer under construction. This Northwest slightly below the average level of migration, Licking Northwest Northeast County project was recently completed. meaning that retailers generally held steady with few closings. Menards is opening their second location inMadison CBD Columbus next month at 6810 East Broad The typical tenants currently in the market areCounty Southeast Street in the Northeast submarket. The big box restaurants by a significant percentage. Fast Southwest retail will be 180,000 square feet when food or fast casual restaurants are being Fairfield County completed. Menards recently purchased 40 aggressive. Other types in the market include Pickaway County acres along U.S. 23 in Lewis Center for planned discount oriented tenants, auto parts, frozen future development. yogurt, and fitness conceptsThe Columbus retail market includes 11suburban submarkets and the Central Tenants are finding TI allowance to be the Waggenbrenner Development Inc.’s Commons atBusiness District. A total inventory of 55 biggest hurdle. Landlords are seeing Clark Hall has broken ground on their 22,000million square feet of space with only 1 concessions to tenants as the biggest hurdle,million of that space in the CBD. square foot mixed-use, retail space. Chipotle because the retail leasing environment is so Mexican Grill, Panera Bread, Rusty Bucket competitive. Class A opportunities are Restaurant and AT&T Mobile have all signed to especially competitive. Another challenge is the lease space when it opens in October 2012. gap in asking rates and rates sought for lease opportunities in Class B and C shopping MARKET ACTIVITY centers. Landlords are having difficultly finding Market Activity Volume is the sum of the good credit tenants in Class B and C centers. absolute value of each absorption change in the market and it tells us a little more about what UPDATE New Supply, Absorption and Vacancy Rates SALES ACTIVITY SALES PROPERTY ADDRESS DATE SALE PRICE SIZE SF GRANTOR GRANTEE PRICE / SF TYPE SUBMARKET 1500 Gemini Place 4/27/2012 $10,150,000 151,000 Polaris CW LLC Costco Wholesle Corp $67.22 Big Box Northeast 3700 High Street 6/28/2012 $2,800,000 145,000 BEF Management, Inc. Electronic Classroom of $19.31 Other Southeast Tomorrow 2682 Westerville Road 4/30/2012 $650,000 22,084 James & Rebecca 786 R & N LLC $29.43 Conv/Strip Center Northeast Oberland 303 Front Street 6/11/2012 1,800,000 21,400 North Bay Real Estate 303 S Front Street LLC $84.11 Restaurant Central 1756 Brice Road 5/14/2012 $350,000 18,660 Century City LP Impala Capital LLC $18.76 Conv/Strip Center Southeast 4000 Sullivant Avenue 4/2/2012 $1,065,000 15,000 Frazier Development First Impressions Collision $71.00 Automotive Southwest 6695-6755 Avery Muirfield 5/12/2012 5,000,000 13,801 Daimler Group Pmdm-Avery LLC - Strip Northwest Drive LEASE ACTIVITY PROPERTY ADDRESS LEASE SF TOTAL SIZE LESSEE ASKING PRICE TYPE SUBMARKET 166 Wilson Road 25,440 633,013 Habitat for Humanity $4.00 Power Center Southwest 911 Central Parkway 25,000 322,369 TJ Maxx $8.00 Power Center Licking 300 Hamilton Road 9,981 176,610 Affordable Uniforms $14.00 Anchored Strip Center Northeast 3703 Broad Street 9,818 511,575 Royal Garden Buffet $10.00 Power Center Southeast 1131 Columbus Pike 8,250 73,654 Aaron Rents $10.00 Community Center North Delaware 8603 Sancus Boulevard 7,500 60,274 Tilted Kilt $17.00 Neighborhood Center Northeast 16 Main Street 7,000 7,000 Coffee shop $2,000.00 Restaurant CentralP. 2 | COLLIERS INTERNATIONAL
  • 3. RESEARCH & FORECAST REPORT | Q2 2012 | 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 1,105,385 51,399 4.6 - 1,200 - - $12.00 -FAIRFIELD 4,144,963 441,739 10.7 (12,156) 54,664 - - $15.59 $11.81LICKING 4,000,073 342,074 8.6 37,226 35,031 - - $13.00 $11.84MADISON 214,406 25,112 11.7 1,358 (15,827) - - - -NORTH DELAWARE 2,235,958 148,236 6.6 7,450 (1,852) 30,000 - - $13.61NORTHEAST 16,320,781 1,032,369 6.3 75,667 64,890 202,789 - $14.05 $11.57NORTHWEST 13,258,413 1,124,233 8.5 (18,984) (36,822) 120,000 - $12.65 $18.78PICKAWAY 741,829 7,737 1.0 (1,587) (1,587) - - $8.50 $14.00SOUTHEAST 10,054,743 1,667,264 16.6 (11,716) (104,816) - - $9.03 $11.71SOUTHWEST 7,050,411 1,627,044 23.1 33,017 9,641 - - $10.15 $7.63UNION 1,161,503 54,939 4.7 - (9,000) - - - $16.00TOTALS 60,288,465 6,522,146 10.8 110,275 (4,478) 352,789 - $12.35 $12.03 Net Absorption Construction Asking Rental RatesPROPERTY TYPE Total SF Vacant SF Vacancy % Current Quarter Year-to-date Current Completions (NNN)ANCHORED STRIP 11,912,558 1,618,470 13.6 26,325 51,229 - - $11.22BIG BOX 7,645,635 984,367 12.9 - (15,241) 260,000 - $6.81CONV/STRIP CENTER 4,115,704 609,503 14.8 5,043 (62,283) - - $10.33FREESTANDING 3,534,319 305,630 8.6 14,523 31,828 22,789 - $11.76REGIONAL CENTER 4,106,470 366,875 8.9 1,430 2,313 - - $10.22STRIP 5,480,508 679,041 12.4 62,537 28,230 70,000 - $12.35SUPER REGIONAL CENTER 15,687,684 1,197,990 7.6 417 (8,434) - - $12.03URBAN RETAIL 663,236 136,200 20.5 - - - - -COMMUNITY 133,012 33,320 25.1 - (33,320) - - $6.00NEIGHBORHOOD 6,489,090 590,750 9.1 - - - - -POWER 520,249 - 0.0 - 1,200 - - -GRAND TOTAL 60,288,465 6,522,146 10.8 110,275 (4,478) 352,789 - $11.10QUARTERLY COMPARISON AND TOTALS Net Absorption Construction Asking Rental RatesQUARTER, YEAR Total SF Vacant SF Vacancy % Current Quarter Year-to-date Current Completions Neighborhood PowerQ1, 2012 60,288,465 6,632,421 11.0 (112,378) (112,378) 280,000 - $10.80 $11.07Q4, 2011 60,288,465 6,523,775 10.8 187,621 489,194 70,000 27,000 $11.66 $12.93Q3, 2011 60,261,465 6,671,088 11.1 38,783 298,933 27,000 158,302 $11.80 $12.45Q2, 2011 60,127,163 6,729,871 11.4 59,572 260,790 185,302 495,647 $12.88 $13.58 MINIMUM WAGE The minimum wage increased across Ohio by $.30 to $7.70, effective January 1, 2012. The minimum wage for tipped employees will climb 15 cents to $3.85 an hour. The rise is a part of a scheduled increase, tied to consumer prices. COLLIERS INTERNATIONAL | P. 3
  • 4. RESEARCH & FORECAST REPORT | Q2 2012 | RETAIL | GREATER COLUMBUS REGIONCBDThe Central Business District (CBD) was flat in FUNDAMENTALSabsorption, but activity is sure to increase in the Three sources are helpful when gauging retail 522 offices incoming quarters as more multi-familyconstruction projects begin and are completed. consumer activity: the consumer confidence index; a weekly poll conducted by Gallup; the 62 countries onProjects that were announced or began in June Beige Book produced by the Federal Reserve 6 continentsand July 2012, total 409 new units near the Bank semi-quarterly.CBD. United States: 147 Canada: 37 The consumer confidence index is produced by Latin America: 19NORTH The Conference Board and is a survey of how Asia Pacific: 201The north submarkets include Northwest, confident consumers are in the current economic EMEA: 118Northeast, and North Delaware. conditions by their spending and saving habits. • $1.8 billion in annual revenue In June, the index was 62.0, decreasing 240 • 1.25 billion square feet underThe Northwest submarket saw 18,000 square basis points from 64.4 in May 2012. In January, managementfeet of negative absorption from a large vacancy the index was at 61.1. As a guide, the index was • Over 12,300 professionalsby Bed, Bath and Beyond from 3610 Dublin 112.5 in July 2007, six months before beginningGranville Road. The Easton Town Center co- of the recession.developers Steiner + Associates and The GREATER COLUMBUS REGIONGeorgetown Co. have announced that they will Gallup’s consumer spending measure tracks the Richard B. Schuen SIOR CCIMbe adding more than 50,000 square feet of new average dollar amount Americans report CEO | Principal | Columbus Two Miranova Placetenants this year and renovating more than spending or charging on a daily basis, not Suite 900150,000 square feet of existing space. Easton counting the purchase of a home, motor vehicle, Columbus, Ohio, 43215will also see an expansion in parking space with or normal household bills. Over the three month TEL +1 614 410 5612an increase of 600 spaces, which will be period between April and June, the 14-daycompleted in 2013. rolling average rose slightly from $76 to $65 with a high of $77 June. Leslie Hobbs Director of Marketing OhioNorth-Delaware saw 7,500 square feet of Two Miranova Placepositive absorption with Aaron Rents and Hertz The Cleveland Federal Reserve reports on Suite 900Rent A Car combining for more than 8,000 consumer spending twice a quarter in the Beige Columbus, Ohio, 43215square feet of absorption at 1131 Columbus Pike. Book. The data for these reports comes from TEL +1 614 410 5640 qualitative surveys of retailers in the fourthThe Northeast submarket saw more than 75,000 district, which includes Columbus. In June,square feet of positive absorption. Leases at 300 retailers reported that sales held steady on a Jonathan Schuen Research AnalystHamilton Road, 8589 Columbus Pike and 8603 month-over-month basis, but increased by mid- Two Miranova PlaceSancus Boulevard combined for nearly 60,000 single digits relative to year-ago levels. Retailers Suite 900square feet of the Northeast’s absorption. then anticipated that revenues during their next Columbus, Ohio, 43215 fiscal quarter would be above prior-year levels, TEL +1 614 437 4495SOUTH mainly in the mid-single digits. Retailers citedThe southern submarkets are Southeast and upward pressure on vendor costs, but wereSouthwest. In the Southeast, Habitat for reluctant to pass through rising costs toHumanity leased 25,000 square feet at 166 consumers. Capital spending for the yearWilson Road. remained on target and monies would be used largely for technology enhancements, distribution This document/email has been prepared by Colliers International for advertising purposes. ColliersEAST facilities, and store remodeling. International statistics and data are audited annually and may result in revisions to previously reported quarterlyThe eastern submarkets are Licking and Fairfield In July, the reserve bank reported that retailers and final year-end figures. Sources include Columbus Dispatch, Business First, Xceligent, CoStar, Chain StoreCounties. Fairfield lost 12,000 square feet of reported little change in sales during May on a Age, Wall Street Journal, Bureau of Labor Statistics,space from numerous leases. The Licking month-over-month basis, but the sales were Bureau of Economic Analysis, Gallup and the Cleveland Federal Reserve.submarket gained 37,000 square feet from TJ higher relative to year-ago levels. Increases inMaxx and Site Tech leases at 911 Central vendor prices were attributed to higher costs forParkway, the Cross Creek Shopping Center. off-shore labor. Inventories continued to rise modestly, but they were described asWEST manageable. Capital spending for the yearThe western submarkets include Union and remains on target. No hiring is anticipated,Madison counties. The Madison and Union except at new stores, and wage pressures aresubmarkets showed marginal change. contained. Accelerating success.www.colliers.com/columbus