Oklahoma City 2015 Mid-Year Retail Market Summary TABLE of CONTENTS
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Oklahoma City 2015 Mid-Year Retail Market Summary TABLE OF CONTENTS Retail Market Summary 1-2 Submarket Map 3 Quick Hits 4-5 North Submarket 6-7 Northwest Submarket 8-9 South Submarket 10-11 Edmond Submarket 12-13 West-Central Submarket 14-15 Moore / Norman Submarket 16-17 Eastern OK County Submarket 18-19 Retail Sales Summary 20-21 Von MaurThe construction Outlet Shoppes at Quail at Oklahoma Springs MallCity The information contained herein has been obtained from reasonably reliable sources. Price Edwards & Company makes no guarantee, either express or implied, as to the accuracy of such information. All data contained herein is subject to errors, omissions and changes. Reproduction in whole or in part, without prior written consent is prohibited. Oklahoma City 2015 Mid-Year Retail Market Summary THE RETAIL MARKET Retail is becoming a story of the haves big tenants to University Northpark and royalty payments are down. So, while the and the have nots. The overall market has a TIC ownership structure which limits numbers currently look good, there is still vacancy ticked up to 9.3 percent at mid- their flexibility in doing deals. A number reason to pause as we look forward. Since year from 8.25 percent at year-end. Activity of centers have similar stories. On our retail tends to lag changes in the economy, in newer centers remains strong; overall stand-alone store list, a few big boxes it becomes a question of how long energy vacancy in centers built since 2000 is have become available due to closures, prices are down. If it’s an extended period, right at 3 percent. We continue to see including four Homeland stores. With all expect to see some weakness; if prices a shortage of quality space which is the excitement at the top of the market, continue to rebound, we may see little leading to new development. However, there is some churning in the mid and long-term effect. the rest of the market is not as robust. If lower-end markets, creating more overall you dig into the numbers, you see two vacancy and increasing the distance from New & Expanding Retailers things. First, many older centers have top to bottom. significant vacancy, most due to either The health of the upper end of our market years of deferred maintenance and/or Oil & the Economy is illustrated by the quality of new tenants being located in an area that is no longer either entering our market or about to a prime retail area. Smaller local tenants From talking with retailers and seeing enter our market. As noted for the last often have a problem paying significantly the amount of activity in the market, the several reports, Walmart continues to higher rents than they have in the past. downturn in energy prices has had little expand and grow its footprint in Oklahoma Their occupancy may, therefore, be limited or no effect on the retail market to date. City with three new Sam’s Clubs either somewhat to the older centers which have Perhaps the best indication of national open or under construction, four new a much lower cost basis and can meet the firms’ view of Oklahoma City is Kite Realty’s Neighborhood Markets and three new or needs of these locals insofar as rent is purchase of Belle Isle Station at a 5.4 planned Supercenters. H & M announced concerned and create a “win-win” situation capitalization rate (see the investment sales its first Oklahoma store at Quail Springs for all parties. Second, the numbers show summary on page 21). In addition, the Mall, which continues General Growth’s several large neighborhood centers that numbers retailers rely on - income & job revitalization of the mall. Winco, which have developed some vacancy due to loss growth, population growth, employment – announced four stores last year, is moving of anchors, missed deals or ownership all still look good. It’s helped that energy forward and should start construction difficulties. Parkway Plaza in Norman is prices have rebounded but they remain soon. Uptown Market, Crest, Sprouts a good example: this center has 53,000 well-below pre-downturn levels. State and Natural Grocers are all adding metro square feet available as it has lost some and city tax revenues are down as a result, locations. Grocery has been one of the OKC TOTAL RETAIL MARKET VACANCY OKC TOTAL RETAIL MARKET INVENTORY 12% 50 GLA SF Freestanding SF 10% 40 8% 30 6% 20 4% (millions of square feet) (millions of square 10 2% 0% 0 2011 2012 2013 2014 2015 2011 2012 2013 2014 2015 1 OKC TOTAL RETAIL MARKET ABSORPTION 0.8 Survey Footnote: 0.7 Our survey tracks 28.3 million square feet in 242 buildings of 0.6 over 25,000 square feet and 13.0 million square feet of stand- 0.5 alone buildings for a total market of 41.3 million square feet. 0.4 There continues to be a significant number of smaller strip centers in the market (under 25,000 s.f. in size). We would 0.3 estimate there are easily 3.9 million square feet of these (millions of square feet) (millions of square 0.2 properties in the market. 0.1 0.0 2011 2012 2013 2014 2015 most active market sectors, although we do a significant number of 10,000 to 20,000 around the new park and phase three of not see one of the national full-line chains square foot strip centers built throughout the larger retail development. entering our market in the near term. iFLY the market. will join Top Golf and Cabella’s at Chisolm New developments in the works include the Creek. The market has reached a point that this grocery anchored GBT center at Interstate incremental growth has not kept up with 40 and Czech Hall Road, the Bridges at Tenants of interest that are reportedly close retailer demand. Consequently, a number Springcreek in Edmond, and Highland Park to finalizing deals include Costco, REI, of larger developments are either underway Village at NW 178th street and Western. The Fresh Market, Trader Joes, Gander or planned. Leading the way is Chisolm One of the more interesting is Glimcher’s Mountain, Crate & Barrel, as well as a Creek. Chisolm Creek has already made addition to the Triangle at 63rd and Grand; number of smaller boutiques. We are on a splash in the market by bringing in initial plans call for a more dense, walkable, the radar of a number of other name tenants Cabela’s, Top Golf and iFLY. Their first urban development unlike any other in as well. This interest combined with our 60,000 square foot multi-tenant building Oklahoma City. lack of quality space is what is driving will be started later this year. This 190 acre existing and planned new development. mixed-use development will add to the It should be noted that retailer demand has retail dominance of the Memorial Corridor. increased rents in the market, particularly Development & Re-development Other developers are in the planning/pre- for new developments. Outparcels in leasing stages of projects in the same area, front of big boxes and preferred small The last few years, retailers and developers including the Shoppes at Quail Springs that shop space is seeing rent above $30 per have responded to growing demand by is currently under construction at May and square foot and, with triple net charges expanding existing centers, building Memorial. Two or three other significant included, nearing $40 per square foot in stand-alone stores, and, for smaller Memorial Road developments are also some instances. While this helps pull up tenants, building small lower risk to the possibilities. rents market-wide, the benefit to many developer strip centers. This trend has of the older, established centers has continued. Westgate Marketplace has Westgate Marketplace is expected to start been limited, particularly those relying on added approximately 40,000 square their south of Interstate 40 development in primarily local tenants. feet that includes 5 Below, Versona and the not too distant future. 240 Penn Park is Cavenders. Shops at Fox Lake is adding planning to add 70,000 to 100,000 square nearly 30,000 square feet of small shop feet to their development anchored by an space. Winco, as an example, is building expanded Conns. University Northpark stand-alone stores. And, we are seeing is pre-leasing both the restaurant space GLA SF Vacant SF Vacant % OKC Retail Market Totals 28,338,216 2,635,624 9.30 RETAIL SUBMARKET MAP 3 Apple stores are the most profitable retail stores, generating over $5,000/SF in sales on average U.S. Real Retail & Food Service Sales Recession $ Billions – Seasonally Adjusted $200 $180 $160 $140 $120 0 $100 92 93 94 95 96 97 98 99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 U.S. Real Retail & Food Service Sales $ Billions – Seasonally Adjusted $190 $180 $170 $160 $150 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 4 Apple stores are the most profitable retail stores, Oklahoma City generating over $5,000/SF in sales on average Quick Hits LOCAL • Plaza Mayor recently opened its Mercado in a portion of the former Dillard’s space. • Inland American is now known as InvenTrust Properties; it owns Memorial Square and Rockwell Plaza in Oklahoma City and Tulsa Hills in Tulsa. • In the past 12 months, downtown Oklahoma City has added or is close to adding nearly 190,000 square feet of retail/restaurant ten- ants, led by the Dust Bowl & Fassler Hall (40,000 s.f.).