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retail Trends ReportGreater Columbus Regionwww.colliers.com/columbusColumbus Region OverViewColumbus’ retail market saw its fourth consecutive quarter of positive absorption with 49,058 square feet,continuing the trend of eleven of the last twelve quarters that have seen positive absorption. Vacancy nowstands at 10 percent. The largest leases signed this quarter were Dick’s Sporting Goods and Best Buyrenewing their 49,447 square foot lease and 30,000 square foot lease, respectively, at Parkway CentreNorth. Lucky’s Fresh Market also entered the Columbus market with a 24,000 square foot grocery inClintonville.Forecasts and Reflections• The retail market continues to slowly grow in Columbus. The boom in the development of new apartmentbuildings continues all across the city bringing with it new retail space. The construction outlook remainshigh as over 170,000 square feet of new retail space continues to be built.• Giant Eagle draws nearer to beginning construction on its two new stores in the Columbus market. An84,000 square foot Giant Eagle is being built at the northwest corner of Cemetery Road and BrittonParkway as well as a 92,000 square foot grocer at the new Grandview Yard development.• Cabela’s completed construction of its 80,000 square foot retail store just north of Polaris Fashion Place. It opened to the public in early March.• The largest sale transactions this quarter were the 220,079 square foot Westerville Plaza and the 160,702square foot Arlington Square as part of a portfolio sale between Kimco and Garrison Investment Group.Also of note was the 188,287 square foot Brice Outlet Mall sold for $950,000 to 5780 Scarborough LLC.Market indicatorsRental Rates Converge, BiG Box DipsAsking RatesQ12013Q22013*VacancyNet absorptionconstructionRental Rates —*Projected change to following quarterQ1 2013 | Retail$4.00$6.00$8.00$10.00$12.00$14.00$16.00Q108Q208Q308Q408Q109Q209Q309Q409Q110Q210Q310Q410Q111Q211Q311Q411Q112Q212Q312Q412Q113AnchoredStrip Neighborhood Community Big Box0.0%2.0%4.0%6.0%8.0%10.0%12.0%14.0%(700,000)(500,000)(300,000)(100,000)100,000300,000500,000700,000900,000Q208Q308Q408Q109Q209Q309Q409Q110Q210Q310Q410Q111Q211Q311Q411Q112Q212Q312Q412Q113VacancyRateCompletionsandAbsorptionsCompletions Absorption Vacancy RateVacancy Rate over completions and absorptionsRental RatesThe average askingrental rates for Big Boxhas dipped to $5.92,from its previous high of$6.51. Anchored stripand neighborhoodcenters rates have metaround the $11.50 mark.The region postedpositive results duringthe fourth quarter of2012, with vacancy ratesdecreasing to 10.0percent from 10.1percent.Construction Fuels Retail Market in 2013
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 Conference BoardConsumer Confidence Index, which had improved inFebruary, declined in March. The Index now stands at59.7, down from 68 in February. The Present SituationIndex decreased to 57.9 from 61.4 and the ExpectationsIndex declined to 60.9 from 72.4 last month. Possibleexplanation for the decrease in confidence is the recentsequester that has likely created uncertainty regardingthe economic outlook.Gallup’s consumer spending measure tracks the averagedollar amount Americans report spending or charging ona daily basis, not counting the purchase of a home, motorvehicle, or normal household bills. Over the three monthperiod between January and March, the 14-day rollingaverage increased from $83 to $84 with a high of $96 inthe second week of March. Gallup’s consumer spendingmeasure is running at a higher level in early 2013 thanhas been the case over the past several years, butremains well below the $106 of early 2008.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. While many retailersreported strong sales, they noted they were still belowyear-ago levels. Most retailers, however, anticipate thattransactions in the upcoming months will be above year-ago levels, in the low to mid-single digits. However, thereis concern about the impact of rising gasoline prices onspending by lower-income households. Increasedvolume was seen in apparel and firearms and vendorand shelf prices held steady. Inventories rose slightly,but they were described as manageable. Capitalexpenditures were on plan for the fiscal year and nosignificant hiring is anticipated, except for staffing newstores. Sales of new motor vehicles grew at a robustpace during January when compared to this time lastyear. Dealers credited milder-than-normal Januaryweather and pent-up demand for the sales boost.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 Grantee Price / Sf type submarket87-133 Huber Village Blvd 1/7/2013 $2,500,000 220,079 Kimco Garrison Investment Group $11.36 Anchored Strip Northeast5780 Scarborough Blvd 1/10/2013 $950,000 188,287 Brice Mall Investments LLC 5790 Scarborough LLC $5.05 Neighborhood Center Southeast1821-1851 Henderson Road 1/7/2013 $12,250,000 160,702 Kimco Garrison Investment Group $76.23 Neighborhood Center Northwest1161 Columbus Pike 1/31/2013 $2,600,000 84,247 Delaware Land Co D & D Property Group LLC $30.86 Neighborhood Center Delaware1800 Hilliard Rome Road 2/8/2013 $15,403,123 54,261 P &P Taylorsville LLC Realty Income Corp $283.87 Freestanding Northwest4044-4052 Morse Road 2/27/2013 $3,475,000 19,827 Casto Northland 3 LLC $175.27 Neighborhood Center Northeast2582-2682 Hilliard RomeRoad1/4/2013 $2,075,000 19,200 Hilliard Rome Square LLC Rainbow Development Corp $108.07 Conv/Strip Ctr Northeast2900 Bethel Road 3/26/2013 $519,000 16,053 Adam’s Investment LLC Madden’s Pointe LLC $32.33 Freestanding Northeast1130 N Memorial Drive 2/4/2013 $672,500 15,500 DCR Real Estate IV LLC Energy Contractors LLC $43.39 Freestanding FairfieldDelaware CountyPickaway CountyUnionCountyMadisonCountyLickingCountyFairfieldCountyNorth /NortheastSoutheastSouthwestNorthwestCBDLease activityProperty Address Lease Sf Total Size Lessee Asking price (NNN) Type Submarket1680-1760 Stringtown Road 49,447 400,000 Dicks Sporting Goods (renewal) $23.00 Power Center Southwest1680-1760 Stringtown Road 30,000 400,000 Best Buy (renewal) $23.00 Power Center Southwest2800 North High Street 24,000 33,836 Luckys Fresh Market $13.00 Convenience/Strip Northeast1680-1760 Stringtown Road 21,835 400,000 Michaels (renewal) $23.00 Power Center Southwest1710-1850 Columbus Pike 10,100 122,607 Sears Hometown $10.00 Power Center Delaware548-658 East Broad Street 10,000 137,000 Dollar Tree $13.00 Convenience/Strip Licking2605-2777 Northland Plaza Drive 6,300 205,553 St. James Christian Center - Anchored Strip Center Northeast338-770 Colemans Crossing Blvd 6,075 461,330 Total Renal Care, Inc. $11.50 Power Center Union2605-2777 Northland Plaza Drive 5,600 205,553 Fiesta Jalisco - Anchored Strip Center Northeastp. 2 | Colliers Internationalresearch & forecast report | Q1 2013 | Retail | Greater Columbus Region
EmploymentColumbus was the 2nd ranked city inthe Country in terms of job creation forthe 1st quarter. Houston was the onlycity who outpaced Columbus. At theend of 2008, Ohio was 80 basis pointshigher than the national unemploymentaverage. As we sit today, we are 110basis points lower than the nationalaverage.update Market ComparisonsRetail marketNet Absorption Construction Asking Rental RatesSubmarket Total SF Vacant SF Vacancy % Current Quarter Year-to-date Current Completions Neighborhood PowerCBD 1,102,826 51,399 4.7% - - 71,735 0 $12.00 -Fairfield 3,960,854 388,911 9.8% 7,430 7,430 0 $14.86 $13.00LICKING 3,960,108 300,155 7.6% (8,260) (8,260) 0 $13.00 $15.90Madison 214,406 22,892 10.7% (4,120) (4,120) 0 - -NORTH DELAWARE 2,190,769 129,820 5.9% 10,100 10,100 0 $25.00 $13.00Northeast 16,908,822 860,935 5.1% 25,881 25,881 7,007 80,000 $13.97 $14.15Northwest 13,191,214 1,195,122 9.1% 5,662 5,662 67,500 0 $10.67 $15.11Pickaway 656,177 6,150 0.9% - - 0 $10.50 -Southeast 10,036,965 1,485,253 14.8% (2,531) (2,531) 0 $8.95 $11.39Southwest 7,092,147 1,555,327 21.9% (8,179) (8,179) 10,739 0 $10.14 $7.70UNION 1,161,503 56,650 4.9% 23,075 23,075 0 - $16.00Grand Total 60,499,791 6,052,614 10.0% 49,058 49,058 172,621 80,000 $11.45 $12.27Net Absorption Construction Asking Rental RatesProperty Type Total SF Vacant SF Vacancy % Current Quarter Year-to-date Current Completions (NNN)Anchored Strip Center 11,984,834 1,342,335 11.2% 67,443 67,443 22,647 - $11.54Big Box 7,635,821 814,447 10.7% (1,426) (1,426) 10,739 80,000 $5.92Community 4,140,660 615,184 14.9% (38,085) (38,085) - $10.46Conv/Strip Ctr 3,553,229 290,295 8.2% 11,085 11,085 - $12.01Freestanding 4,019,270 275,114 6.8% 566 566 71,735 - $11.17Neighborhood 5,469,160 759,123 13.9% (7,585) (7,585) 67,500 - $11.45Power 15,949,195 1,195,846 7.5% 17,060 17,060 - $12.35Regional Ctr 663,236 136,200 20.5% - - - $10.22Strip 133,012 33,320 25.1% - - - $12.35Supr Reg Ctr 6,431,125 590,750 9.2% - - - $12.03Urban Retail 520,249 - 0.0% - - - -TotalS 60,499,791 6,052,614 10.0% 49,058 49,058 172,621 80,000 $11.18quarterly comparison and totalsNet Absorption Construction Asking Rental RatesQuarter, year Total SF Vacant SF Vacancy % Current Quarter Year-to-date Current Completions Neighborhood PowerQ4, 2012 60,494,500 6,098,072 10.1 108,252 150,955 336,875 33,789 $11.40 $12.21Q3, 2012 60,494,500 6,198,833 10.2 41,157 39,054 231,000 180,000 $11.82 $11.68Q2, 2012 60,288,465 6,522,146 10.8 110,275 (4,478) 352,789 - $12.35 $12.03Q1, 2012 60,288,465 6,632,421 11.0 (112,378) (112,378) 280,000 - $10.80 $11.07research & forecast report | Q1 2013 | Retail | Greater Columbus RegionColliers International | p. 3
CBDThe Central Business District (CBD) absorptionremains flat, but is sure to increase in the comingquarters as the multi-family construction projectsbegin and are completed, opening the way for newretail opportunities. Construction continues on nearly1,500 new units: Flats on Vine II (120), The Goodale(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, Northeastand North Delaware. The Northwest submarket saw5,662 square feet of positive absorption decreasingthe vacancy rate to 6.7 percent. Construction on the80,000 square foot Cabela’s was completed and thestore opened to the public in early March. Star Lanesat Polaris Fashion Place finished their renovation for a35,000 square foot bowling alley and event center thatrecently opened. Construction continues on The Lane,a 67,500 square foot mixed-use development that willoffer street-level retail space, second floor office spaceand more than 100 luxury apartments.The Northeast submarket led all markets with 25,881square feet of positive absorption in large part toLucky’s Farmers Market moving into a 24,000 squarefoot space at 2800 N. High Street. The positiveabsorption was intact even with the departure of a36,487 square foot Marshall’s at Northern LightsShopping Center.North Delaware saw 10,100 square feet of positiveabsorption with Sears Hometown being the only newtenant moving into the space at Delaware CommunityPlaza.SouthThe southern submarkets are Southeast andSouthwest. Both saw negative absorption for the firstquarter after both recorded positive absorption toclose out 2012. The Southwest submarket saw 8,170square feet of negative absorption but does have10,739 square feet under construction as part of thelarger Grandview Yard development site.The Southeast submarket saw a modest 2,532 squarefeet of negative absorption. However, a notabletransaction took place in the Brice Outlet Mall sellingfor $950,000.EastThe eastern submarkets are Licking and Fairfieldcounties. Licking County saw 8,260 square feet ofnegative absorption, however, did see a lease signedby Dollar Tree for 10,000 square feet at HazelwoodPlaza in Pataskala. A notable transaction wascompleted at 1130 N. Memorial Drive in Lancasterselling for $672,500. Recent news also indicated thatMeijer plans to close its Newark store in May or June.WestThe western submarkets include Union and Madisoncounties. Union County saw positive absorption of23,075 square feet which is up significantly from theprevious quarter. Coleman’s Crossing saw the majorityof the changes including 6,075 square feet of spaceleased to DaVita Total Renal Care and 4,500 squarefeet leased to Tres Potrillos Mexican Restaurant.Madison County, however, saw negative absorption of4,120 square feet for the first quarter.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 353,688 square feet.This is slightly below the average level of migration(444,548 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 46 tenants looking forspace between (1,000 and 10,000 square feet), andten 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 | Q1 2013 | Retail | Greater Columbus Region