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Plaza Realty President Mark Harrell is negotiating with tenants to fill the 22-story Hammons Tower, which is 25 percent vacant. "We've had a little pickup in activity in the last quarter, albeit mild," he says.
Plaza Realty President Mark Harrell is negotiating with tenants to fill the 22-story Hammons Tower, which is 25 percent vacant. "We've had a little pickup in activity in the last quarter, albeit mild," he says.

Emptied Solo plant, Hammons Tower push vacancy rates

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Prospects are on the radar, but tenants remain elusive for long-vacant floors at Hammons Tower, and an industrial icon has dumped nearly 1 million square feet on the commercial real estate market.

In the first-quarter Market Trends report by Xceligent Inc., Springfield-area industrial vacancies climbed 64 percent in the first quarter compared to the fourth quarter, while retail and office lease space was flat.

Industrial
Mark Patrick, commercial agent for Coldwell Banker Vanguard Realtors, said the first-quarter jump in industrial vacancies to 7.7 percent from 4.7 percent is almost entirely due to the March 3 closure of the 945,165-square-foot Solo Cup plant after nearly 60 years in operation.

“That’s a big warp in the market,” said Patrick, who holds a seat on the Xceligent board.

Vacancies in the northeast quadrant of the city increased by 7 percent with that space available. Total absorption in the Springfield area was down roughly 7,000 square feet aside from the Solo shut down, according to Xceligent.

Patrick said most real estate professionals are still relatively optimistic about the conditions. “The quality and the quantity of activity has been better in the first quarter compared to the last quarter,” he said.

Rising gas prices, though, might throw a wrench in the market traction.

“Everything moves by truck, and inflation is going to have to kick in soon,” Patrick added. “What recovery we have going on is fairly fragile and (gas prices) could hurt that.”

Patrick Harrington, a leasing agent with Solo plant owner Davis Properties, said there have been nibbles of interest in the site, 1100 N. Glenstone Ave., which has two buildings, one with roughly 725,000 square feet and another with 220,000 square feet. But, he said, it might be a while before the property gets leased.

“We don’t have anything pending as a result of those,” Harrington said, adding the site has drawn interest from a half-dozen qualified prospects the last six months. “It could be anywhere from two to three months to two to three years to fill a building of that size.”

Harrington said it took two years to fill Davis Properties’ 400,000-square-foot facility at 2065 E. Pythian St. That property, which is being leased by SRC Holdings Corp., was vacant 2005–07 after its 20-year lease with Solo wasn’t renewed.

Harrington said Davis Properties has marketed the iconic plant on Glenstone through Xceligent’s database as well as commercial listing services LoopNet and CoStar Group Inc. He said the Springfield Area Chamber of Commerce also is helping to secure the next tenant.

The industrial vacancy rate in Springfield remained below 10 percent in all five city sectors, while the highest rate in the area was found in Rogersville at 28.8 percent.
Buildings between 5,000 square feet and 25,000 square feet represented 64 percent of total vacancies, the report said.

Office
Hammons Tower stands tall in downtown Springfield, and inside, more than 51,000 square feet of the building’s 197,000 square feet of Class A office space is unoccupied.
The vacancies, now at roughly 25 percent, are largely due to BKD LLP’s 2009 exodus.
First-quarter office vacancies throughout the area were flat, according to the Xceligent report.

“We’ve had a little pickup in activity in the last quarter, albeit mild,” said Mark Harrell, the Plaza Realty leasing agent in charge of Hammons Tower.

Harrell said negotiations are under way with a couple of potential clients on roughly 10,000 square feet to 15,000 square feet in the 22-story structure, where lease rates are $20.95 per square foot. The rate is full-service gross, covering taxes, utilities, maintenance and insurance, Harrell said.

Office vacancies had been climbing in the area before they dropped slightly to 9.4 percent in the first quarter compared to 9.5 percent in fourth-quarter 2010. Earlier in 2010, the office vacancy rate was as low 8.2 percent.

“A flat market is not a good market in the eyes of owners, developers and brokers, but it certainly is better than heading into the negative,” Harrell said. “Stable to plus-absorption is where we need to be.”

As vacancies rise, net absorption, or the number of occupied spaces, decrease.

Harrell said, historically, the central business district has had higher occupancy than other submarkets, but the development of the BKD building added 20,000 square feet on top of the space it’s occupying. The first floor of that building is still for lease.

“As with many things, timing is everything,” Harrell said. “BKD’s exit from (Hammons Tower) just happened at a tough time for everybody. There was a lot of space that just came on the market at the wrong time.”

In the city, the central business district and the southeast quadrant of Springfield recorded the highest vacancies with 11.5 percent and 11.7 percent, respectively, in the first quarter. Nixa recorded the highest office vacancy rate at 34 percent of space available, while Republic, Rogersville and Strafford reported no office vacancies in the study.

Retail
Xceligent found no change in the percentage of retail space available, with the first quarter holding at 5.9 percent vacant. Of the nearly 16.7 million total square feet in the market, less than 1 million square feet was unoccupied.

Eight properties were listed as available at Sunshine Corners and Sunshine Corners West, across from the Wonders of Wildlife museum, according to commercial listing site www.costar.com.

A total of more than 62,000 square feet was available at the shopping center, roughly 6.3 percent of the area’s total retail space available.

The convenience/strip center category comprised 46 percent of the space available in the area. Willard recorded the highest vacancy rate in the area at 13.4 percent, and Ozark netted the lowest at 2.1 percent. Springfield’s central business district had the highest rate in the city at 10.7 percent, while southeast Springfield reported a low 2.9 percent.

The retail vacancy rate was as low as 5.6 percent in 2010.[[In-content Ad]]

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