Retail vacancies improve in 1Q

The commercial real estate market in the Springfield area during the first quarter compares favorably to the first three months of 2011, with the most improvement coming from the retail sector, according to market tracker Xceligent Inc.

Xceligent’s first-quarter Market Trends report found that retail vacancies improved to 5 percent as of March 31, compared to 5.7 percent during the same period in 2011.

Among the first-quarter retail transactions in Springfield was the sale of the 26,000-square-foot building at 2025 E. Chestnut Expressway.  

Sunrise Communications President Eric Rowden said he purchased the building as an investment and for room to grow the wireless retailer. The building has nine retail spaces with five occupied by tenants including Greek Corner and Two Men and a Truck. Rowden said he already had moved into two of the vacant spaces, with plans to expand into the other two.

Listing agent Ross Murray said the Chestnut building deal points to an improving commercial real estate climate, and he’s seen business pick up since the beginning of the third quarter of 2011.

“We had a strong first quarter in all sectors of the market,” said Murray, a vice president at R.B. Murray Co. “Office leasing has been a little bit soft, but industrial has seen a recent bump in activity.”

In the last nine months, Murray said his company sold five industrial properties totaling 350,000 square feet to companies investing or expanding operations. Buckhorn and Mechanical Contracting Co. were among the buyers.

“We had three or four people take large spaces that had been sitting on the market for two or three years. That tells me that the economy is moving in the right direction,” Murray said. “People aren’t just dipping their toes in the water. They feel confident enough in Springfield and the economy to reinvest.”

According to the Market Trends report, which covers retail, industrial and office vacancies in Springfield, Willard, Strafford, Rogersville, Ozark, Nixa and Republic, industrial vacancies were nearly flat at 8 percent in the first quarter, compared to the same time last year. The report said Strafford absorbed the most industrial space – 24,000 square feet – while southwest Springfield put the most space back on the market with roughly 16,000 square feet. Ozark held the highest first-quarter industrial vacancy rate in the area at 14.7 percent. Both Willard and Strafford posted no industrial vacancies.

Office vacancies also were flat at 11 percent, compared to the first three months of 2011.

Nixa was the only market to post positive office absorption – the difference between space filled and space lost during a specific period of time. Nixa absorbed 2,000 square feet of office space, but recorded an office vacancy rate of 28.3 percent.

Northwest Springfield reported the lowest office vacancy rate in the city at 4.8 percent, while the central business district and southeast Springfield each posted an 11.8 percent high.

Neil Stenger, a commercial real estate agent for Murney Associates Realtors, said he has experience with properties in all three sectors and specializes in working with those interested in investment properties. He said he has been busy during the first quarter, but it may take awhile for market reporting to reflect that activity.

“On the commercial side, you put things on paper and they usually don’t close until six months later,” Stenger said.

Last quarter, Stenger brokered a 15,300-square-foot sale at 3120 S. Scenic Ave. to Store Galore LLC. The former Southwest Storage facility was listed for $695,000.

Though it performed well compared to the same period in 2011, the retail sector had a negative absorption of 20,000 square feet during the quarter. Vacancies were at 4.8 percent in the fourth quarter of 2011, and Rogersville had the highest vacancy rate in the retail sector at 11.2 percent.

According to the Xceligent report, Advance Innovation Technology had one of the most notable moves during the quarter in the industrial sector. The company vacated its 20,000-square-foot facility at 2915 N. Le Compte Road before occupying a 27,500-square-foot space at 1128 N. FR 123.

As another sign that the industrial sector may be improving, Murray said he’s recently been shopping the 72,500-square-foot former Bay Valley Foods pickle plant, adjacent to Partnership Industrial Center at 2848 N. Le Compte Road, to two potential tenants he declined to name. The sector, Murray said, has had a deceivingly high vacancy rate since the Solo Cup building’s 1 million square feet entered the market in March 2011.

Both Stenger and Murray noted higher interest from out-of-town retailers.

“The big difference I’ve noticed is that I’m getting a lot of calls from companies that are out of our market that have thought about expanding in our market,” Stenger said.