After a dismal start to 2017, the retail market bounced back this quarter, posting positive 156,604 square feet of net absorption. New deliveries totaled 418,050 square feet, which was the main driver for positive absorption. The Columbus market saw an uptick in vacancy, however, to 7.3 percent mainly due to Hobby Lobby and The Anderson’s closing multiple stores in the area. The overall asking rates dropped slightly to $11.21 per square foot,
but big box rates rose nearly three dollars to $9.62 per square foot due to the addition of new, higher quality available space. Neighborhood and power centers also saw a healthy rise in rates to $10.95 and $11.65 per square foot, respectively. Just like any city, the future of the Columbus retail market remains uncertain. Economists predict the ‘roller coaster’ ride will continue as Amazon and the e-commerce phenomenon drive the market and the
economy shifts to the new wave of retail. Regional malls and supercenters are taking the biggest hit as large vacancies are affecting this category.
According to a Connect Commercial Real Estate article, shopping center landlords typically fill the vacant space with churches, non-profit schools and random enterprises, but recently new ideas like mixed-use real estate, converting malls into streetscapes with restaurants and offices or entertainment and industrial parks have begun to surface. Looking forward, tenants can expect to see the traditional use for retail space change as demands shift
towards a different avenue. Employment in the retail/leisure sector jumped to 9.52%, up 30 basis points compared to last quarter. This is a bright spot for the Columbus market. Not only is employment up, but retail sales are growing, which are forecasted to increase by 3.5 percent, nationally, in 2017.
The vacancy rate increased this quarter by 70 basis points to 7.3 percent due to store closings that continue to affect the city. The Southeast submarket, which includes Grove City, Obetz, and the southeastern side of Columbus, recorded the largest increase in vacancy from 12.86 percent to 18.18 percent due to Sears vacating at Eastland Mall and The Andersons vacating their 144,870-square-foot store.
NET ABSORPTION >>
This quarter, the Columbus retail market posted 156,604 square feet of positive net absorption. Absorption numbers are still down compared to the same quarter last year, however it represents a complete turnaround from the previous quarter which posted negative absorption. Leasing activity remains low as the retail market is still
searching for its new niche. The Northeast submarket experienced the largest occupancy gains this quarter with 373,186 square feet absorbed, largely due to the completion of IKEA at Polaris.
CONSTRUCTION ACTIVITY >>
There is currently 305,829 square feet in the construction pipeline for the Columbus retail market. Of the 14 projects overall, eight are community centers. The northwest submarket records the highest activity with 126,159 square feet under construction. The largest project is a 75,000-sqaure-foot anchored strip center on East Broad
Street and 36,926 square feet remain in the pipeline at Dublin’s Bridge Park project. The Columbus market recorded 418,050 square feet of completions during the quarter – all in the Northeast submarket. IKEA’s 354,000-square-foot store came online this quarter and the Linworth Crossing 42,050-square-foot strip center was completed. Additionally, Lazer Kraze completed its 22,000-sqaure-foot freestanding building at Preserve Blvd and N Hamilton Road.
SALES ACTIVITY >>
This quarter, seven buildings totaling 1.2 million square feet sold for a total salesvolume of $62,275,000.
River Valley Mall in Lancaster sold for $19.4 million making it the largest deal this quarter. The Market at Mill run was purchased by Fishinger Blvd Holdings LLC for $13 million, and Agree Realty purchased LA Fitness for $12,875,000.