1. retail Trends ReportGreater Columbus Regionwww.colliers.com/columbusExpansion Lifts Market Out of RecoveryColumbus Region OverViewThe Columbus retail market recorded its third consecutive quarter of strong positive absorption with 108,252square feet, adding to the recent trend that ten of the last eleven quarters having seen positive net absorption.The largest leases signed this quarter were Nordstrom Rack leasing 36,250 square feet at 3670-3772Easton Way, and Star Lanes leasing 35,000 square feet at 8655 Lyra Drive in the Northeast submarket.Both of these deals made the list of the top three largest lease transactions of 2012, along with Big Lotsleasing 35,000 square feet at the Hill Road Plaza in the third quarter.Forecasts and Reflections• After being one of the most hard hit sectors during the downturn, the retail property sector continued astrong recovery in 2012. Grocery anchored retail properties, especially in urban locations, were one ofthe hottest investments. Giant Eagle’s transition highlighted the quarter as its 116,129 square foot grocerystore at 4747 Sawmill Road sold for $22.4 million ($193 per square foot), and its 67,000 square footstore at 1451 5th Avenue sold for $6.7 million ($99 per square foot).• The construction outlook continues to improve as over 170,000 square feet of new space broke ground inthe past ninety days. The Columbus market will see moderate to high new construction in 2013. The bigstory for the past quarter was the completion of the fully leased 22,789 square foot, Commons at ClarkHall located at 73-109 North Hamilton Road.• Cabela’s, a large outdoor retailer, continues construction on its 80,000 square foot store that will employ175 full and part-time employees. The store will open the beginning of March.Market indicatorsRental Rates Converge, BiG Box DipsAsking RatesQ42012Q12013*VacancyNet absorptionconstructionRental Rates — —*Projected change to following quarterQ4 2012 | Retail$4.00$6.00$8.00$10.00$12.00$14.00$16.00Q108Q208Q308Q408Q109Q209Q309Q409Q110Q210Q310Q410Q111Q211Q311Q411Q112Q212Q312Q412AnchoredStrip Neighborhood Community Big Box0.0%2.0%4.0%6.0%8.0%10.0%12.0%14.0%(800,000)(600,000)(400,000)(200,000)-200,000400,000600,000800,0001,000,0001,200,000Q208Q308Q408Q109Q209Q309Q409Q110Q210Q310Q410Q111Q211Q311Q411Q112Q212Q312Q412VacancyRateCompletionsandAbsorptionsCompletions Absorption Vacancy RateVacancy Rate over completions and absorptionsRental RatesThe average askingrental rates for Big Boxhas dipped to $5.92,from its previous highof $6.51. Anchoredstrip and neighborhoodcenters rates have metaround the $11.45 mark.The region postedpositive results duringthe fourth quarter of2012, with vacancyrates decreasing to 10.1percent from 10.2percent.
2. FundamentalsThree sources are helpful when gauging retail consumeractivity: the consumer confidence index, a weekly pollconducted by Gallup, and the Beige Book produced bythe Federal Reserve Bank semi-quarterly.The consumer confidence index is produced by TheConference Board and is a survey of how confidentconsumers are in the current economic conditions bytheir spending and saving habits. The ConferenceBoard Consumer Confidence Index, which had declinedslightly in November, posted another decrease inDecember. The Index now stands at 65.1, down from71.5 in November. The Expectations Index declinedsharply to 66.5 from 80.9. The Present Situation Indexincreased to 62.8 from 57.4 last month. The suddenturnaround in expectations was most likely caused byuncertainty surrounding the oncoming fiscal cliff.Gallup’s consumer spending measure tracks theaverage dollar amount Americans report spending orcharging on a daily basis, not counting the purchase ofa home, motor vehicle, or normal household bills. Overthe three month period between October and December,the 14-day rolling average rose from $76 to $83 with ahigh of $90 during the week leading up to Christmas.That is up from $73 in November and the highestmonthly figure Gallup has reported since December2008. It is also the first reading above the $80 marksince the 2008-2009 recession.The Cleveland Federal Reserve reports on consumerspending twice a quarter in the Beige Book, and datacomes from qualitative surveys of retailers in the fourthdistrict, which includes Columbus. Total retail salesincreased 0.5 percent in December, following a 0.4percent increase in November. A significant chunk ofthat growth over the past two months has been drivenby autos sales. Excluding autos, retail sales increased0.3 percent in December and fell 0.1 percent inNovember. Still, over the past 12 months, the growthrate in overall sales (up 4.7 percent) is outpacing theex-autos trend (4.1 percent).The Federal Reserve Bank of Cleveland reports at leastonce a quarter in the Federal Reserve’s Beige Bookabout the construction activity in the fourth district,which includes the Columbus Metropolitan StatisticalArea (MSA). At the beginning of December, the BeigeBook reported new multi-family construction spendingincreased 0.5 percent, and is up 45.9 percent year-over-year. Private nonresidential construction spendingdecreased 0.7 percent over the month to $294.5 billionand is up 8.2 percent year-over-year. The only positivesectors were transportation and communication, withmonthly gains of 3.4 and 2.8 percent, respectively.The Columbus retail market includes 11suburban submarkets and the CentralBusiness District. This includes a totalinventory of 60 million square feet ofspace with only 1 million of that space inthe CBD.update New Supply, Absorption and Vacancy Ratessales activityProperty Address sales date sale price size SF Grantor GranteePrice/ Sf type submarket4747 Sawmill Rd 11/6/12 $22,400,000 116,129 Echo Continental Hilliard LLC Retail Properties of America $193 Big Box Northwest1451 W. 5th Ave 12/13/12 $6,650,000 67,000 Broadview Company LLC Kohr Royer Griffith Inc. $99 Big Box Southwest4889 Chatterton Road 11/28/2012 $1,234,468 48,856 GD C Associates Dembena LLC $25 Neighborhood Center Southeast5662 Broad Street 10/24/2012 $3,300,000 28,538 Viking Partners Galloway LLC FIDC XX LLC $116 Neighborhood Center Northwest5536 Hamilton Road 10/04/2012 $1,605,000 19,546 Retail Properties Ltd Gosula Estates Ltd $82 Conv/Strip Center Northeast5236-72 Cleveland Avenue 10/09/2012 $670,000 17,000 Retail Properties Ltd Marion Investment Company $40 Conv/Strip Center Northeast6320 E. Main Street 10/26/2012 $4,800,000 14,668 Reynoldsburg W Investment LLC Reynoldsburg Wag LLC $327 Freestanding Southeast1144 Norton Road 11/06/2012 $730,000 13,344 Anchor L Investment I Ltd Potts Land Investments LLC $55 Conv/Strip Center Southwest4345 Cleveland Avenue 11/20/2012 $400,000 11,500 Cityvilla Investments LLC Mt Sinai Church of God $35 General Northeast4784 N. High Street 10/24/2012 $635,000 10,933 GNWLAAC Real Estate Holding LLC Saha Properties LLC $58 Freestanding NorthwestDelaware CountyPickaway CountyUnionCountyMadisonCountyLickingCountyFairfieldCountyNorth /NortheastSoutheastSouthwestNorthwestCBDLease activityProperty Address Lease Sf Total Size Lessee Asking price Type Submarket3670-3772 Easton Way 36,250 506,911 Nordstrom Rack - Power Center Northeast8655-8669 Lyra Drive 35,074 41,889 Polaris Entertainment Partners - Anchored Strip Center Northeast10-128 Dillmont Drive 18,900 106,832 Planet Fitness $14 Neighborhood Center Northwest1627-1735 N. Memorial Drive 8,598 179,487 Veterans Administration $12 Power Center Fairfield3670-3772 Easton Way 8,000 506,911 Tillys - Power Center Northeast3596-3694 E. Main Street 7,153 12,000 Deals and Steals $10 Neighborhood Center Northeast7107 E. Main Street 6,560 6,560 Buyback Entertainment $10 Freestanding Southeast8269-8333 Lazelle Road 6,400 28,000 Royalty Child Care Center $13 Conv/Strip Center Northeastp. 2 | Colliers Internationalresearch & forecast report | Q4 2012 | Retail | Greater Columbus Region
4. CBDThe Central Business District (CBD) absorptionremains flat, but activity is sure to increase in thecoming quarters as more multi-family constructionprojects begin and are completed, opening the way fornew retail opportunities. Construction continues onnearly 1,500 new units: Flats on Vine II (120), TheGoodale (174), Liberty Place Phase II (200), ColumbusCommons (300), Harrison Park (108), Aston Place(59), Liberty Crossing II (200), and NeighborhoodLaunch Apartments (260).NorthThe north submarkets include Northwest, Northeast,and North Delaware. The Northwest submarket saw18,052 square feet of positive absorption from a largevacancy filled at 64 Wilson Bridge Road in theWorthington Square. The following retailers signedleases in the revitalized mall this past quarter: Pies andPints (4,500 square feet), Farmers Market (4,071),Learning Express (2,731), Simply Baby (2,065), FaceForward (1,908), Modealise (1,791), Montero Native Art(1,788), Nattie Cakes (1,089), and Big Shot Sportswear(907). Planet Fitness signed an 18,900 square footlease at 10 Dillmont Drive.North-Delaware saw 2,638 square feet of negativeabsorption this past quarter; however Golf ETC signed3,232 square feet of space at 1400 Gemini Place inThe Gemini Place Town Center.The Northeast submarket led the market in 2012, with80,065 square feet of positive absorption, and lost nomomentum this quarter after posting another 67,095square feet of positive absorption. Star Lanes signeda 35,000 square foot lease to occupy the old CircuitCity freestanding building at 8655 Lyra Drive. TheCommons at Clark Hall development on the corner ofNorth Hamilton Road and Granville Street wascompleted this quarter, adding over 22,789 square feetof positive absorption. The Rusty Bucket, SmashBurger, Panera, Chiptole, AT&T, Gahanna Vision,Menchies Frozen Yogurt, and Supercuts occupy theconvenience strip center that recently open.SouthThe southern submarkets are Southeast andSouthwest. The Southeast saw insignificant positiveabsorption of 6,625 square feet as five suites totaling18,500 square feet were occupied at 6300 E.Livingston Avenue. The Southwest submarket sawlimited activity in the fourth quarter, as three deals(Shihab Law, QT Nails, and Infinity Staffing Solutions)totaling 5,000 square feet filled vacancies in the WestBroad Plaza.Vacancy in the southwest submarket remains thehighest in the region at 22 percent. (See Page 2 formore Investment Sales Activity information)EastThe eastern submarkets are Licking and Fairfieldcounties. Fairfield counties absorption remained flat asa notable 8,598 square foot deal transpired at 1627-1735 North Memorial Drive. The Licking submarketgained 15,083 square feet of positive absorption asPink Poodle Consignment Boutique and Tan Pro leased1,190 square feet and 3,900 square feet respectively atSouthgate Shopping Center in Hebron.WestThe western submarkets include Union and Madisoncounties. The Union submarket showed marginalchange, while Madison recorded positive 6,340 squarefeet of absorption which is fully attributed to two dealssigned in the Eagleton Retail Center.Market ActivityMarket Activity Volume is the sum of the absolutevalue of each absorption change in the market and ittells us a little more about what exactly happened tothe market behind the absorption number. The MarketActivity Volume was more than 272,752 square feet.This is slightly below the average level of migration(302,768 square feet), meaning that retailersgenerally held steady with few closings.The typical tenants seen most frequently entering themarket are restaurants and food operators by asignificant percentage. Fast food or fast casualrestaurants are being aggressive. Other types in themarket include discount oriented tenants, auto parts,frozen yogurt, cell phone providers, and fitnessconcepts. There are currently 48 tenants looking forspace between (1,000 and 10,000 square feet), andnine tenants looking for space 10,000 square feet ormore.Tenants are finding operating expenses and realestate taxes continue to escalate, and TI allowance tobe the biggest hurdles. With the retail leasingenvironment so competitive, landlords are seeingconcessions to tenants as the biggest hurdle. Class Aopportunities are especially competitive. Anotherchallenge is the gap in asking rates and rates soughtfor lease opportunities in Class B and C shoppingcenters. Landlords are having difficultly finding goodcredit tenants in Class B and C centers.Greater Columbus RegionRichard B. Schuen SIOR CCIMCEO | Principal | ColumbusTwo Miranova PlaceSuite 900Columbus, Ohio, 43215tel +1 614 410 5612Leslie HobbsDirector of Marketing OhioTwo Miranova PlaceSuite 900Columbus, Ohio, 43215tel +1 614 410 5640Jonathan SchuenResearch AnalystTwo Miranova PlaceSuite 900Columbus, Ohio, 43215tel +1 614 437 4495522 offices in62 countries on6 continentsUnited States: 147Canada: 37Latin America: 19Asia Pacific: 201EMEA: 118• $1.8 billion in annual revenue• 1.25 billion square feet undermanagement• Over 12,300 professionalsThis document/email has been prepared by ColliersInternational for advertising purposes. ColliersInternational statistics and data are audited annually andmay result in revisions to previously reported quarterlyand final year-end figures. Sources include ColumbusDispatch, Business First, Xceligent, CoStar, Chain StoreAge, Wall Street Journal, Bureau of Labor Statistics,Bureau of Economic Analysis, Gallup and the ClevelandFederal Reserve.www.colliers.com/columbusAccelerating success.research & forecast report | Q4 2012 | Retail | Greater Columbus Region