More retail space vacated; market moves towad stabalization
Store openings were down and store closings continued.
For the third consecutive period, building owners in the local retail real estate market lost tenants, according to a report filed by commercial broker CB Richard Ellis of Grand Rapids. The vacancy rate rose from 18.9 percent at the end of the first quarter to 20.6 percent at the end of the third quarter. A year ago the vacancy rate was 12.9 percent.
More than 2.3 million square feet of the market’s 11.2 million square feet is unoccupied.
“Although only one new national foreclosure (Office Depot) impacted the market this period, a number of smaller businesses have gone dark. Nonetheless, Grand Rapids retail is showing signs of stabilizing, as negative absorption slowed,” wrote Jill Langosch, CBRE/GR vice president of research, in the third quarter report.
Negative absorption through the first quarter totaled nearly 600,000 square feet, while almost 201,000 square feet were vacated over the past six months. (See related chart.)
“Most new vacancies comprised less than 3,000 square feet,” said Langosch.
CBRE/GR reported that only two major sales took place the past six months. One had Art Van Furniture buying the former La-Z-Boy building on Wilson Avenue in Grandville. In the other, an investor bought the Kohl’s building near the Woodland Shopping Center.
CRBE/GR also reported that two new strip centers opened during the past six months. One was the 20,000-square-foot Corner Shops at Woodland, while the other was the 13,252-square-foot Standale Retail Center at 4482 Lake Michigan Drive NW.
Other highlights from the report included:
- Deal volume is expected to remain sluggish as tenants are hesitant in an uncertain market.
- Demand for the remainder of the year will be largely driven by lease expirations.
- Landlords are attempting to fill big-box spaces with alternative uses like government agencies.
- Obtaining financing continues to be “very difficult.”
The report indicated that discretionary retail operations, like apparel and jewelry stores, have suffered the most since consumers cut back their spending. But retail centers that have grocery stores have fared better than those that don’t.
“Looking across development types, the vacancy rates for community centers, neighborhood centers and strip centers are trending upward,” reported Langosch.
“While community centers lost large national tenants due to bankruptcies, and strip centers saw local business closures, neighborhood centers with grocery stores as anchor tenants remained relatively stable.”