Office, retail vacancies improve in third quarter

Available retail, office and industrial space in the Springfield area shrank in the third quarter compared to the previous quarter, but retail was the only sector to show improvement in vacancies compared to the same time one year ago, according to Xceligent Inc.’s most recent Market Trends report.

The retail vacancy rate settled at 5.1 percent in the third quarter, compared to 5.8 percent in the same quarter in 2010. The retail vacancy rate for Springfield, Nixa, Republic, Willard, Strafford, Rogersville and Ozark was 5.2 percent in the second quarter.

Office vacancies improved to 11 percent in the third quarter from 11.8 percent in the second quarter. The current rate is flat compared to the third quarter a year ago.  

The industrial vacancy rate was 7.2 percent for the third quarter, up 2.7 percent versus the same period in 2010, but down 0.3 percent from the second quarter. In March, nearly 1 million square feet of industrial space became available with the closure of the Solo Cup plant on North Glenstone Avenue. In the sample area, there is 2.2 million square feet of industrial space available for lease or sale, according to Xceligent.

Retail
Bill Beall Co. Inc. broker Nancy Herchenroeder pointed to a handful of tenant signings in the quarter as a sign of a rebound.

Simply Yo yogurt shop and Miqulito’s Café each signed leases at Kickapoo Corners Shopping Center, and Beall Co. helped Dollar General Stores expand into an additional 3,000 square feet at Valley Watermill Shopping Center.

“People are finally making a commitment, whether it be in relocation or expansion,” said Herchenroeder, a member of Xceligent’s retail board.

One of the notable transactions of the quarter was Great Southern Bank’s purchase of the former Hollywood Video site at 1805 W. Kearney St. Brian Eaton, a spokesman for the bank, said Great Southern would soon begin the construction of a roughly 3,000-square-foot branch to replace a branch a block away. The new branch, he said, is expected to be complete by the end of March.

“The current location is a bit outdated, so we are trying to freshen up the look,” Eaton said, adding that the new branch would be roughly twice the size of the current facility.

Herchenroeder said while local retail vacancies are improving, area brokers would still like to see the rate edge down to roughly 4.5 percent.

“In this day and age, if we can see any improvement, I think we’re all very happy,” she said.

Industrial
During the quarter, C&M Gearworks Inc. purchased a 16,000-square-foot industrial building at 1450 E. Trafficway. Owner Chris Gordon said the August move from an 8,000-square-foot headquarters at 2516 N. Eastgate Ave. was necessitated by an increase in business for the automotive parts manufacturer and repair shop during the last three years.

C&M Gearworks secured a $395,000 Small Business Administration-backed 504 loan, through Empire Bank. Gordon said the 20-year low-interest loan made the move economically feasible.  

“My payments are actually less now than they were at my previous location, so it was kind of a no-brainer,” he said.

Moves such as these helped the industrial rate drop nearly a percentage point in the third quarter, said Jerry Redfearn, the real estate agent for CJR Commercial Group who brokered the sale and serves as a local industrial board member for Xceligent.

Other notable moves for the quarter include Do Outdoors Inc.’s lease of a 20,000-square-foot property in the 2200 block of East Bennett Street. Also, RigMaster Power USA LLC in Strafford purchased 18,000 square feet at 311 E. Evergreen St.

Redfearn said more than 27 million square feet of industrial space is captive, or occupied and not available for sale or lease, and the 7.2 percent vacancy rate among that which is available is fairly healthy for the area.

As for the Solo Cup plant, Redfearn said Warren Davis Properties, the owner of the plant, is considering a subdivide to attract multiple tenants. Even so, he said a property of that size could take years to fill.

Office
Ron Tappan, a manager and broker with CJR Commercial Group and a member of Xceligent’s office board, said there was some slight improvement during the quarter in overall occupancy.

Still, the 11 percent vacancy rate is too high for the market, Tappan said. “It ought to be around 7 percent,” he said.  

He said there was still a lot of quality office space on the market to be absorbed, pointing to the 20-story Hammons Tower and its nearly 50,000 square feet available.

Nixa posted the highest office vacancy rate in the area at 26.7 percent. But with only a little more than 25,000 square feet of office space available, the city doesn’t figure prominently in the area office market.

“With so much availability in Springfield at very reasonable if not more than reasonable prices, people would tend to come to Springfield as opposed to maybe going to Nixa looking for a bargain. But the Nixa market is so small … that 10 vacancies can make a huge percentage,” Tappan said.

According to the Xceligent report, third-quarter office lease rates ranged from an average $8.69 per square foot for Class C to $13.40 per square foot for Class A.

The northwest quadrant of Springfield had the lowest vacancy rate in the city at 3.1 percent. The central business district had the highest office vacancy rate in the city at 11.3 percent. In the area, there is 667,073 square feet of available office space.[[In-content Ad]]