Positive Net Absorption in 2Q retail
The Columbus retail market recorded 14,125 square feet (SF) of positive net absorption during the second quarter of 2017, according to the second quarter retail market report from the Central Ohio Commercial Information Exchange (COCIE), which uses Xceligent as its vendor. Compared to the same quarter a year ago, absorption was down from 579,605 square feet of positive net absorption.
Director of Analytics for Xceligent Kim Begley said the positive net absorption during the second quarter can be attributed to the delivery of the new Ikea store for 354,000 SF, Grandview Mercantile which leased 22,000 SF, Big Lots which leased 37,000 SF on West Fifth Avenue, and the completion of the Zettler Hardware building for 24,030 SF in Pickerington.
“This activity is normal for this time of year with the build to suit projects that delivered and brough a new tenant such as IKEA to the Columbus metro area,” Begley said.
Mary Bresnahan, vice president at CBRE said that she is seeing a positive push with smaller retailers (under 2000 SF) but really seeing a stall with mid to large box retailers.
“I would say the supply and demand for smaller space is great, which helped the entire marketplace,” Bresnahan said. “This is not normal.”
The total vacancy rate has increased from 5.7 percent at the close of 2Q2016 to 6.7 percent at the close of 2Q2017.
According to Begley, the primary influence for the increased vacancy rate was from store closings during 2017.
“The Andersons General Store closed both locations in Columbus, Giant Eagle and HH Gregg also closed big box stores in the Columbus market,” Begley said.
Bresnahan commented that the increase in vacancy rate can be attributed to national retailers getting rid of their poorer performing stores, and as a result leaving vacancies in malls and strip centers.
Weighted average asking rents in all specific uses increased from $10.99 per square foot (psf) at the close of 2016 compared to $12.62 psf for 2Q 2017. The weighted average asking rent is the weighted average quoted as monthly triple net lease (NNN) rent per square foot.
Begley explained the increase in weighted average asking rents is the result of the demand for tenants wanting to be close to the “hot spots” like Polaris, Grandview, Dublin and Grove City.
Store closings continued during the second quarter of 2017 including The Anderson on Bent Tree Boulevard for 147, 034 SF and Alshire Road for 144,870 SF. Additional closings included the Giant Eagle at Hilliard Rome Commons and HH Gregg on Sawmill Parkway.
Begley said she foresees furniture stores, restaurants, and churches as potentially filling the large vacancies that occurred in the second quarter.
Bresnahan added that gym users, discounters like Goodwill, and trampoline users will also be moving into the larger vacancies.
Currently there is 539,000 SF under construction in the Columbus retail market, which includes home improvement, discount and home furnishing type of stores.
Begley said current trends in commercial real estate include new locations opening for discount retailers such as Marshal Fields, TJ Maxx and Big Lots.
According to Bresnahan, the ‘urban center’ continues to be a trend in commercial real estate.
“The ‘urban center’ is an urban twist on the lifestyle centers of old,” Bresnahan said. “You can eat, work, live and play all in one.”
During the second quarter of 2017, over 430,000 SF was delivered to the market. The largest delivery was in the Polaris market with the newly completed IKEA, comprising 354,000 square feet.
Over 102 leases and over 445,000 square feet of retail space were leased in the tracked data set in the third quarter. The Columbus tracked data set consists of buildings considered to be competitive within the brokerage community.
Begley indicated that demand for inventory looks good for the remainder of 2017, particularly with over 540,000 SF under construction.
Bresnahan commented that small spaces are in high demand, especially in popular centers.
2nd Quarter 2017 Retail Overview
2nd Quarter 2016 Retail Overview
1st Quarter 2017 Retail Overview
For vacancy and absorption purposes, COCIE tracks 1,469 existing regional, community, convenience/strip center, neighborhood, grocery anchored strip and Freestanding with a minimum of 10,000 SF in the Franklin, Delaware, Union, Licking, Fairfield, Pickaway and Madison counties with a total inventory of almost 76 million square feet.
The entire database includes 6,383 retail records totaling over 115 million square feet.
To view commercial properties for sale or lease in central Ohio, visit www.COCIE.org
To view residential properties for sale, visit www.Realtor.com
To view residential housing reports, visit www.ColumbusRealtors.com/stats