Market Stability: Real estate leaders say Springfield’s commercial landscape remains healthy

Despite ongoing uncertain economic headwinds, the commercial real estate market continues to show resiliency across multiple sectors, local industry leaders say.

“It’s healthy. It’s not robust, but things are definitely still moving,” says Jeff Childs, senior adviser with SVN/Rankin Co. “I think our inventories of certain product types are low. Our occupancy levels are still high, so that’s good.”

Childs said the industrial sector has probably been the most vigorous over the last couple of years, noting that market’s vacancy rate is about 1.7% for the third quarter of this year, according to data from Washington, D.C.-based firm CoStar Group Inc. (Nasdaq: CSGP). In comparison, the U.S. vacancy average is 7.49% for industrial space.

The office sector also is holding steady and seeing strong occupancy, which was challenged nationally amid the COVID-19 pandemic as workflow changed, says Ryan Murray, CEO of R.B. Murray Co. Springfield’s office market has a 4.3% vacancy rate for Q3 this year, according to CoStar, well below the national 14% office vacancy mark. 

“We’ve got strong demand for our target footprint from most offices in Springfield, and the smaller office footprint, say 1,500-6,000 square foot space,” Murray says. “Those are hard to come by right now because they’re well occupied. I’d say new construction is expensive, so that does drive people toward occupying existing inventory, which continues to, again, keep things stable.”

Retail also continues to show consistency locally but on a lesser scale than nationally, according to CoStar data. Annual vacancy in Q3 is 2.34%, while rent growth year-over-year is up just .1% to $13.90 per square foot. In comparison, U.S. retail vacancy is 4.3% and annual rent growth increased 1.9% to $25.52 per square foot.

Both Childs and Murray point to the western part of Springfield as an active construction site for retail with the development of Sunshine Towne Center, which will be anchored by a new Target store. An Olive Garden restaurant opened this summer near the West Sunshine Street and West Bypass intersection, while other tenants on board include BluCurrent Credit Union and Wendy’s. Past Springfield Business Journal reporting put the price tag of Sunshine Towne Center at $60 million.

“That’s where you’ve seen most of the newer development, mainly because that’s where building land is,” Childs says.

Murray says Springfield has been fortunate on the retail side.

“There’s not a ton of excess empty buildings laying around,” he says. “When spaces turn around, you’ve got people who want to lease them.”

Sometimes, Murray says redevelopment is the better move for improving public corridors rather than seeking new space.

“Southern Hills Shopping Center, for example, got a complete top-to-bottom remodel,” he says of the project completed last year that upgraded lighting, roofing and storefronts and widened sidewalks, according to past SBJ reporting. “Obviously, that significant investment was done when there’s demand, but there’s nowhere else to go. You don’t have to go and rebuild new.”

Building credit
Another company that invested last year in that same east Springfield corridor is TelComm Credit Union. The Springfield-based credit union cut the ribbon last October for a 32,000-square-foot operations center it constructed on over 2 acres it owns behind its 2155 E. Sunshine St. branch. The operations center brought together teams including the card department, compliance and marketing under one roof. But the building also devotes much of its first floor to commercial tenant spaces – a plan from the beginning when the project was first proposed three years ago, says Jessica Shorney, president and CEO.

“We’ve seen really strong growth,” she says, noting there’s still empty office space on the second floor where TelComm looks to accommodate future needs. “That was our plan all along: to build the building and then have the leased spaces as part of that.”

Longtime Springfield architecture firm Hood-Rich Inc. relocated last year to the 1722 S. Luster Ave. building from downtown and occupies 4,100 square feet. Shorney said Ink’d Infinity LLC, a cosmetic tattoo shop, opened in roughly 500 square feet over the summer. The other two suites for lease are about 1,200 square feet and 700 square feet, respectively, she says. TelComm recently signed with Graddy Real Estate, an agency with Keller Williams Greater Springfield, to help lease the other spaces.

Shorney says TelComm saw the value of having commercial tenants pay rent but still build a facility large enough to handle growth 30-40 years from now. The building’s footprint was the maximum size that could be constructed on the property, says Lori Johnson Murawski, TelComm’s chief experience officer.

“We had extra space that we knew we didn’t need to utilize right out of the gate, but we will at some point in the future,” Shorney says.

TelComm, which has six branches in addition to the operations center, employs a staff of 84, including 42 in the operations center, officials say. That’s up from nearly 70 employees in early 2023, when the company broke ground on the new center, according to past reporting.

It ranked fourth this year on SBJ’s list of the area’s largest credit unions with $308 million in assets and 24,817 members. The membership number is up nearly 2% from 2024’s total.

Additional branches are being considered but no decisions are pending, officials say.

“We do want to have solid plans in the next year as far as growth and branding,” Shorney says.

TelComm is among companies that own their office space, which was in line with 53% of respondents in SBJ’s 2025 Economic Growth Survey. Companies operating on short-, medium-and long-term leases collectively made up 39% of the responses in the survey. When considering the location of their company’s office, 42% of respondents say they planned to stay in the same place over the next five years, while 40% expected to expand in the market. Only 2% had plans to downsize and just 1% were looking to move out of the market.

Speculative struggles
Both Childs and Murray point to the speculative market for retail and office projects as the main area they see as sluggish.

“I think the speculator is out of the market right now,” Childs says, noting inflationary pressures and higher interest rates are key contributors. “Over the years, we’ve always had people that would buy properties just to create value, or they thought they could get it at a good buy. The speculative market is not what it used to be.”

Costs to construct a new building are high enough that they also are keeping the speculative market down, Childs says.

Murray agrees, particularly when it comes to the office and retail sectors.

“When you mix together high construction costs and interest rates, you begin to have to have a much higher risk,” he says. “We have office buildings coming out of the ground, but it’s not speculative office building, it’s not investment-driven office buildings. They’re owner-occupied office buildings. That speaks to the strength of the people who are occupying them.”

Childs says commercial real estate investors seem to be holding back for more clarity on the current economic environment before taking a risk.

“They’re waiting for an opportunity, and right now the opportunities haven’t presented themselves,” he says.