How would you characterize the local commercial real estate market right now?
The commercial market is active and very robust. It is very healthy, which means our occupancy rates are very high and vacancy is very low. There is a lack of supply and very high demand. We are seeing prices go up, marketing times reduced considerably and many more deals. Last year, I completed 115 deals and we are on pace to significantly do more than that.
The latest Xceligent Market Trends report was a mixed bag with industrial vacancies down to 3.4 percent, retail vacancies flat at 5.2 percent and office vacancies edging up to 8.3 percent. Do you expect to see those level out?
They definitely go together based on the economy and consumer sentiment. If retail sales are up, that’s good for retail space because that’s where it’s being sold. It’s also good for warehouse space because that’s where it’s being held or shipped and it’s good for office space because your accountants are going to be busier.
Where is the next retail boom zone?
There are pockets of redevelopment. Retail is going to be where traffic is and where location is. If you have a lot of traffic and you have high visibility and high density of population, then retail is going to do well. Retail is also in a shift. The internet and the likes of Amazon are changing the face of retail.
Where are these pockets?
There is a lot of new construction and redevelopment on South Glenstone Avenue. We are also seeing new construction and redevelopment on East Sunshine and at Springfield Plaza.
Why is East Sunshine so desirable?
The “all of the sudden” factor is due to the economy. East Sunshine has high demographics with a lot of disposable income. They want to come to town to spend their disposable income. There is new construction of homes outside Springfield and Highway 65 is a main thoroughfare. You have people coming up from the bedroom communities on 65, then using Sunshine to get to the hospital, using Sunshine to get to downtown and using Sunshine to get to Bass Pro [Shops]. When traffic volumes are up and people have money to spend, it will always be a hot area.
How does the local office market look?
Office has gone through a transition in the last few years. Spaces are more efficient. The rule of thumb prior to the recession was 300 square feet per office worker. Nowadays, they are trying to get it down to 180 square feet per office worker. That keeps costs down.
People office from home, and work share has changed things.
You’re developing the three-story National Place office building on the Medical Mile. Is there a need for more office space?
I wasn’t looking to build an office building, but that location changed my mind. We don’t even have the roof on National Place yet and we’ve leased the third floor to Buxton Kubik Dodd Creative, half the second floor, the small building is leased and a fourth of the first floor is leased. A law firm is taking a look at half a floor. It’s because of the location. There are 40,000 cars a day driving by your front door.
What else are you working on right now?
I’m also building a medical office building on Glenstone for AIDS Project of the Ozarks. It’s just north of Sunshine, where the Penny Power building used to be.
Mike Fusek is a senior adviser with SVN Commercial Real Estate, a Rankin Co. LLC. He can be reached at email@example.com.