Last edited 4:10 p.m. Jan. 23.
Editor's Note: The 2011 appraised value of the United Healthcare building, 1930 W. Bennett St., is $6.8 million. The story originally cited a $4 million appraised value, which is its taxable appraised value. The property received a $2.7 million enterprise zone tax abatement.
A $7.7 million investment property with 16,000 square feet of lease space hit the real estate market in October, but it wasn’t enough to tip the scales of the fourth-quarter office vacancy rate.
According to commercial real estate tracker Xceligent, office vacancies held at 10.7 percent in the quarter, compared to the quarter before. Fourth-quarter 2010 posted a 10.9 percent vacancy rate.
Sperry Van Ness/Rankin senior adviser Mike Fusek listed the Class A lease opportunity inside the 63,000-square-foot United Healthcare building, 1930 W. Bennett St., about 90 days ago, and the property was put up for sale in the last month.
“The owners are out-of-state investors and they just had some other opportunities in the Washington, D.C., area that they are pursuing,” Fusek said of New Jersey-based CS Algona Warehouse Inc. “There’s not a whole lot of office building this size available, let alone for sale.”
Xceligent’s Fourth Quarter Market Trends Report also revealed three industrial tenants vacated nearly 100,000 square feet, inching up the industrial vacancy rate in the quarter to 7.5 percent from 7.1 percent in the third quarter. With the Solo Cup plant entering the market in March 2011, the industrial vacancy rate remains a full 3 percentage points higher in fourth-quarter 2011 compared to the same quarter in 2010.
Meanwhile, retail vacancies dropped for the fourth quarter in a row, landing at 4.75 percent at the end of 2011.
Office
A good sign according to brokers in the office sector is the quarter’s positive net absorption of 20,000 square feet, which means that more space is being leased than in the previous quarter.
Also, the average lease price dropped to $12.75 per square foot per month for full-service gross rates in the fourth quarter, according to Xceligent, down from $13.72 in the final quarter of 2010.
The value-priced environment has Fusek optimistic about finding a buyer for the United Healthcare building, which appraised in 2011 for $6.8 million, according to Greene County assessor records.
“If you have most of the building leased by a Fortune 25 company and … it is currently spending $500,000 to remodel different parts of the building, it’s priced very attractively,” he said. “An investor could get a very good return on investment on a building like that.”
Fusek said he already has shown the property at the southwest corner of Kansas Expressway and Bennett Street to other out-of-state investors.
Mark Harrell, a broker with Plaza Realty & Management Services LLC, which manages Hammons Tower, said the 22-story property still has roughly 50,000 square feet available, about 26 percent of the building. In the last quarter, Harrell said he lost one tenant taking up 7,000 square feet and gained another adding 4,000 square feet.
Harrell said the building has never fully recovered from the exit of national accounting firm BKD LLP, which left in 2008.
With the construction of the office building for BKD on the University Plaza Hotel lot across the street, new space was added to the market at a time when the recession was just beginning to hit home. He said the market still has a lot of property to absorb.
“It’s simply a supply and demand issue right now,” Harrell said. “We have a positive supply and I think the trend of positive absorption will continue, but I believe it will be slow-paced until the overall economy improves.”
Retail
Ray Meyer, a broker and manager with McLoud & Co., said he has seen more interest in recent months among those looking for retail space.
“We’ve leased some smaller spots in Nixa, around 1,500 square feet to 2,000 square feet,” Meyer said.
Meyer, who manages five retail properties in Missouri and Arkansas, acknowledged that he deals mostly with office space, but felt he has seen more lenders willing to lend, driving down area retail vacancies.
“With some of the smaller spaces, I think some of the business owners have been able to get some financing to get things going again where even a year or two ago it was very hard to be able to get financing,” Meyer said.
According to Xceligent, the retail vacancy rate was 5.6 percent in the Springfield area in the fourth quarter of 2010, almost a point higher than the most recent quarter.
Southeast Springfield recorded the lowest rate in the city at 2.5 percent, while the central business district had the highest at 9.1 percent. Rogersville’s 11.2 percent rate was highest in the area, which includes Nixa, Willard, Strafford and Ozark.
Overall, the retail trend is promising, Meyer said.
“Vacancies are trending down. I think the market is improving gradually,” he said.
Industrial
Jeff Childs, senior adviser for Sperry Van Ness/Rankin Co., said the industrial picture is relatively bleak when compared to historical figures.
Childs, a member of Xceligent’s Industrial Board, noted that when owner-occupied properties greater than 50,000 square feet are not considered in the quarterly report, the total vacancy rate in the industrial category almost doubles to more than 13 percent.
“This is the real picture,” Childs said. “You’ve seen a contraction in that sector of businesses during the last three or four years, and it has just put more space on the market.”
The big change in the last year is the addition of the roughly 970,000-square-foot former Solo Cup building. Childs applauded the efforts of owner Warren Davis Properties to gain Springfield City Council’s support in December to issue up to $65 million in industrial development revenue bonds for real and personal property improvements at the former plant, with the intent of attracting tenants and jobs.
“I’m glad we’ve got somebody willing to take on the project,” Childs said. “What we don’t want to see is close to 1 million square feet sitting dormant in the center of Springfield. It’s going to take subdividing it in some fashion to make that work.”
Among the largest industrial sector changes in the Xceligent report:
- Thomas Nielson Wholesale vacated more than 52,000 square feet at 1225 N. Belcrest Ave.;
- Ozarks Food Harvest vacated 23,500 square feet at 2504 N. Oak Grove Ave.; and
- CoxHealth vacated 20,000 square feet in the 2200 block of West Sunset Street.
Childs said negotiations are under way to fill part of the roughly 70,000-square-foot building subleased in part by Ozarks Food Harvest. He said the food bank was leasing the space temporarily during the holiday season.[[In-content Ad]]
