Office vacancies jump with Anthem/BCBS downsizing

The office vacancy rate climbed to 11 percent in the Springfield area during the second quarter from 9.4 percent in the first quarter, due largely to a move by Anthem Blue Cross and Blue Shield that dumped nearly 50,000 square feet on the market.

The quarterly Market Trends report by Xceligent Inc. found vacancies were down slightly in both the retail and industrial sectors. Retail showed the most improvement, recording a 5.2 percent vacancy rate from 5.9 percent the previous quarter, while industrial sector vacancies improved to 7.5 percent in the quarter, compared to 7.7 percent in first-quarter 2011.

Skip Liebman, a real estate agent for CJR Commercial Group, feels positive about the recent trends he’s seen, citing increased interest from potential tenants across all commercial property sectors during the last four to five months.

“Just because the federal government is having deficit problems doesn’t mean that the office users, industrial users and retail users aren’t beginning to see the light at the end of the tunnel,” Liebman said.

Office
Galen Pellham, an agent with Murney Associates, is in charge of finding a new tenant for the more than 48,000 square feet of space vacated by Anthem/BCBS at the New Sunshine Technology Center in east Springfield.

He said the company downsized its operations, but it still occupies roughly 7,700 square feet at the south end of the building, 3534 E. Sunshine St., near U.S. Highway 65.

Branson-based Surrey Vacation Resorts will fill some of the void come Sept. 1, when it occupies 10,000 square feet on the north side of the Sunshine Tech Center, space once occupied by an O’Reilly Automotive call center. O’Reilly moved out approximately nine months ago, Pellham said.

The lease rate for the nearly 50,000-square-foot space is $6.50 per square foot triple net, he added, noting there are training tables and work stations throughout.

“Our inquiries have been from call centers either here in Springfield looking for space, or from outside of Springfield looking to move here,” Pellham said. “I’m very optimistic that we will have a tenant or tenants in that space quickly.”

The site vacated by Anthem/BCBS represents about 6 percent of the roughly 840,000 square feet of office space available in the Springfield area. With that opening, southeast Springfield posted the highest vacancy rate in the city at 14.4 percent, while Nixa recorded the highest area rate at 33.6 percent.

Retail
In the retail sector, Liebman said the vacancy rate appears to be dropping because of a lack of construction activity during recent years.

“The only buildings that have really been built are those by owner-occupants. So, (leasing agents) are starting to fill up available inventory,” Liebman said.

Bill Beall Co. Chief Operating Officer Nancy Herchenroeder said the retail market is on an upswing, though she still believes it’s a buyer’s market. In the second quarter, she said the company signed two new tenants to Kansas Station at the corner of Kansas Expressway and Battlefield Road: Phoenix Home Care and J&M Engineering.

The two combined to fill nearly 8,000 square feet in southwest Springfield, which showed the greatest improvement in terms of vacancies – climbing to a 6.4 percent vacancy rate from 7.9 percent.

Bill Beall Co. also recorded the sale of a 15,000-square-foot building at the corner of Commercial Street and Benton Avenue. Herchenroeder said a Pennsylvania investor purchased the property and already has a lease agreement in place for a coffee shop and a retail tenant.

Willard notched the highest retail vacancy rate in the area at 13.4 percent, while Ozark reported the lowest at 2.1 percent, according to Xceligent.

Industrial
While the area industrial vacancy rate improved only slightly in the second quarter, it is still well above 2010 levels. Industrial vacancies jumped roughly 3 percent in the first quarter after the vast Solo Cup plant building entered the market.

Superior Process Solutions filled a vacant 7,500 square feet when in May its owner purchased 2504 E. Livingston St., a 10,000-square-foot building in the Hedges-Goetz Industrial Park east of Neergard Road. Through LGP Holdings LLC, Superior Process Solutions owner Cory Pascoe bought the north Springfield property – out of five or six he considered – after shopping local lease rates, said Chris Mashburn, a purchasing agent and scheduler with the Springfield machine shop. He said R.B. Murray Co. brokered the sale.

Mashburn said monthly payments at the company’s new facility are roughly equal to the lease rate it was paying at its former 3,500-square-foot site on North Cedarbrook Avenue. Factoring into the move was Superior Process Solutions’ roughly 35 percent increase in business the last 12 months, serving such clients as Paul Mueller Co. and Tuthill Corp.

He said Superior Process Solutions has hired three people since the move and other local machine shops he knows have hired up to 20 this year, a sign that local manufacturing is picking up.

“This industry, as far as we’re concerned, is really sitting well. Of course, with what you see on the news every day and with the stock market and all, that could all go away in three months,” Mashburn said.

Rogersville posted the highest industrial vacancy rate in the area at 28.8 percent. All five sectors in Springfield remained under 10 percent in industrial space available with the southwest part of the city recording the lowest rate at 3.7 percent.[[In-content Ad]]