A church’s lease of 17,000 square feet in east Springfield helped to drive down the area’s second quarter office vacancy rate, according to the latest Xceligent commercial real estate report.
The office vacancy rate landed at 10.4 percent in the quarter ending June 30, compared to 11.3 percent in second-quarter 2011.
Vacancies in the industrial sector also dipped, to 7 percent from 7.7 percent in second-quarter 2011, while retail vacancies held steady at 5.2 percent compared to last year, according to the quarterly report covering the Springfield market, which includes Strafford, Rogersville, Ozark, Nixa and Republic.
OfficeOne of the largest contributors to the falling office rate, according to Xceligent, was The Pursuit church’s lease of 17,200 square feet at the New Sunshine Technology Center, 3534 E. Sunshine St., near U.S. Highway 65. Office vacancies in the first quarter were at 10.7 percent.
Pursuit Pastor John Edie said it took more than six months to find the right location for the church’s new home, and he expects services to begin in the building by the end of September.
“We just couldn’t find the kind of space that needed to facilitate a church anywhere in town,” Edie said, adding the church worked with agent Sherry Honeycutt of Keller-Williams Realty. “We might find a building that was the right size, but there was no parking or we might find parking, but the building wasn’t the right size. … There are just a lot of variables that have to be in place to facilitate a church.”
Edie said the congregation has met weekly at New Covenant Academy for about 17 months after leaders at Second Baptist Church decided to plant the new church. Edie said about 200 people attend services each week, and the Sunshine Technology Center space would allow room for up to roughly 600 guests.
Other building tenants are Gold Crowne Resorts and Right Choice Managed Care Inc., said Galen Pellham of Murney Associates Realtors, the leasing agent for Sunshine Tech Center. Right Choice, which previously operated as Anthem Blue Cross and Blue Shield, vacated more than 48,000 square feet in the building last year but still maintains a presence, Pellham said. He said there are two spaces currently available for lease at the center.
Across the Springfield market, office inventory totaled 6.1 million square feet, of which 738,858 square feet was available as of June 30. Nixa held the highest vacancy rate in the area at 29.3 percent, while Republic posted no office vacancies.
Jeff Childs, a commercial real estate agent with Sperry Van Ness Rankin Co. and member of Xceligent’s local office and industrial boards, said office vacancy rates have slowly been dropping due largely to falling prices. During the last year, the average asking rate in the office sector fell to $12.85 per square foot from $13.41, according to the Xceligent report.
“I think we’ve seen owners and landlords get more aggressive in how they market the properties,” Childs said. “There is a correlation between price and activity.”
IndustrialIn the industrial sector, the Nixa market reported more than 18,000 square feet absorbed during the second quarter, helping the community’s vacancy rate drop to 7 percent from 7.8 percent in the first quarter. In Springfield, Packer Warehouse LLC’s purchase of the 17,216-square-foot industrial property at 1619 N. Packer Road contributed to the falling rate, according to the report.
Mike Fusek, a commercial agent with Sperry Van Ness Rankin Co. and member of Xceligent’s office and retail boards, said in an e-mail he secured a long-term lease with cable provider Mediacom at 1619 N. Packer Road. Mediacom Communications Director Phyllis Peters said the company is leasing the Packer Road facility for an undisclosed amount and is utilizing the space as a warehouse for equipment that serves customers in Springfield and southern Missouri. The move consolidates equipment stored in a warehouse Mediacom owns in Mount Vernon and at the company’s South Enterprise Avenue offices, she said.
Childs said low interests rates appear to be attracting buyers. The prime rate as of July 18 was 3.25 percent, according to
FedPrimeRate.com.
“Interest rates are lower than they’ve really ever been for owner-occupiers,” Childs said. “There are some real advantages to taking advantage of the market right now. That’s what is helping to keep things moving.”
While the Xceligent report indicates some positive movement, Childs said the commercial real estate market still has a lot of ground to make up. He said prior to 2008, area office and industrial vacancy rates typically ranged between 5 percent and 6 percent, so he sees recovery in the sector as something that is still slow to come. A factor that is helping vacancies recently, however, is that developers aren’t building new office properties and adding square footage to the market.
“Nobody is building any speculative buildings,” Childs said. “We are still trading the same properties we were before.”
Ozark recorded the highest industrial vacancy rate in the area at 14.1 percent, while Willard posted no industrial vacancies at the end of the second quarter, according to Xceligent.
RetailThe closure of the Price Cutter on West Republic Road contributed to the overall decrease in retail net absorption in the quarter, which was 45,713 square feet. The building added 50,250 square feet to the market.
The retail vacancy rate rose slightly to 5.2 percent April–June, compared to 5 percent in the first three months of the year.
Todd Chambers of Chambers Real Estate, who is a member of Xceligent’s retail board, said while the Price Cutter building may have bumped up the vacancy rate, the full retail sector is flat.
“There is movement within the market, but there is no trend toward higher occupancy,” Chambers said.
During the last two or three years, Chambers said there has been very little new construction in the retail sector with the notable exception of James River Commons.
“Until people get the confidence that the market really has stabilized, I don’t think we’re going to see much new construction,” Chambers said.
While he declined to estimate a timeline on the construction of the Hickory Hills Marketplace – Chambers is shopping lots for developer Paul Larino – Chambers said Eau Claire, Wis.-based home-improvement store Menard’s is still planning to serve as anchor tenant, and the former Hickory Hills school is currently under demolition.
As of June 30, Willard posted the highest vacancy rate in the area at 8.2 percent, while southeast Springfield recorded the lowest rate, 2.8 percent. Battlefield Mall was reporting no retail vacancies at the end of the second quarter.
