Oklahoma City 2016 Mid-Year Retail Market Summary TABLE of CONTENTS
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Oklahoma City 2016 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 21 Urban Outlook 22 The Outlet Shoppes at Oklahoma City 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 2016 Mid-Year Retail Market Summary THE RETAIL MARKET The retail market is better than it seems increase is due to an easing of the like it should be. Given the continued market; however, a deeper look into layoffs & bankruptcies in the energy the number reveals that market growth market, declining sales tax revenues, is driving the increase. For a number and general economic uncertainties, of years, Oklahoma City has had a the expectation would be that the shortage of new, well-located retail Oklahoma economy and the retail space; the market is addressing this market would be in a recession. But, through expansions of existing centers, leasing activity, development and new development and re-positioning interest in our market remain strong. of centers. This past year, the market The unemployment rate has ticked up, added 600,000 square feet of space in but only slightly. Sales taxes in the the 25,000 square foot plus category suburbs have, with limited exceptions, that we track. Market vacancy is just continued to rise. Tinker and the over 8 percent if you add the stand- aerospace industry are expanding. We alone buildings. Several of the new are seeing some weakness in the office developments are in lease-up stage market, primarily energy related, and and are temporarily contributing we are beginning to see some pockets to the additional vacancy – Quail of inconsistent retail performance, Springs Shops, the 240 Penn Park primarily in local tenants. But, overall, addition, Stone Mill in Yukon, Tract 30 the mid-year snapshot of our industry at Chisholm Creek, Northeast Town is pretty good. Center, etc. Existing properties that are being renovated and repositioned Let’s look at the numbers. Mid- have also contributed – Bryant Square, year retail vacancy comes in at 10.4 Edmond Marketplace, Oak Brook percent which is a full percentage among others. The vacated Macy’s point higher than year-end. On the at Quail Springs Mall alone makes up face it of it, this would be cause for half the increase (more on it later). concern. And, no doubt, some of the You can see how market dynamics 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 2012 2013 2014 2015 2016 2012 2013 2014 2015 2016 1 are at play here; expect to see vacancy the 180,000 square foot first phase market has added nearly a half a million fluctuate over the next few years given of development at Interstate 40 and square foot under 25,000 square feet the development activity in the market. Czech Hall Road that will be anchored of strip center space in the last 12 to by Academy, Ross, and Marshalls. 18 months. This doesn’t include the The question as to whether or not A Crest Market will follow. GBT is growth we’re seeing in downtown and activity stalls in the next couple of working on other possible sites in the our urban districts; see the report by years rests with two economic drivers metro as well. Sooner Development Allison Bailey on page 22. These all over which we have little control: does is under construction at 15th & Sooner point to the health and attractiveness the energy market recovery continue? in Midwest City with the Hobby Lobby of Oklahoma City in general and retail And, is there a broader national relocation and an Academy. Poag & in particular. recession? McEwen Lifestyle Centers is purchasing the former Bridges at Springcreek site Survey Footnote: Development in Edmond with plans to build one of Our survey tracks 29.1 million square its lifestyle centers. As mentioned in feet in 252 buildings of over 25,000 Retailer demand has driven significant previous reports, Zerby Interests has square feet and 14.5 million square new development over the past couple plans to extend Westgate Marketplace feet of stand-alone buildings for a total of years. Walmart has opened 1.2 south of Interstate 40. An expansion of market of 43.6 million square feet. million square feet of new stores in the Shields Plaza is a possibility. Charles metro area during this time. Winco, Ballenger continues to work on plans to There continues to be a significant after acquiring four sites in the last two duplicate the success of Springcreek number of smaller strip centers in the years, is expected to start construction Village with a similar development market (under 25,000 s.f. in size). We on their stores later this year. Chisolm at 178th and Western. It’s worth would estimate there are close to 5 Creek, the 192 acre mixed-use noting that these are but a sample of million square feet of these properties development anchored by Top Golf developers working on retail projects. in the market. & Cabela’s is now opening its first of One retailer everyone is following is several multi-tenant buildings, Tract 30. the possible landing of Costco along As noted above, Quail Springs Shops Memorial Road. As is typical in the is in lease up as are several smaller development world, not all of these developments. Mathis Brothers built planned projects will happen. The its Village North concept at Memorial expansion of the Triangle development & Portland that is fully occupied with by Glimcher appears to be on hold a Mathis Sleep Center, La-Z-Boy, and but could be re-started in the future. Ashley Furniture. Tennessee developer It’s also worth noting that in addition GBT Realty is under construction on to these larger developments, the OKC TOTAL RETAIL MARKET ABSORPTION 0.5 0.4 0.3 0.2 (millions of square feet) (millions of square 0.1 0.0 2012 2013 2014 2015 2016 GLA SF Vacant SF Vacant % OKC Retail Market Totals 29,051,431 3,017,257 10.39 RETAIL SUBMARKET MAP 3 Oklahoma City Quick Hits RETAIL Online retail sales increased $$$ by 12% over the past year, compared with 4.6% for overall retail sales, excluding cars Services now account for 70% of consumption, goods account for 30% Macy’s, Nordstrom, Kohl’s and J.C. Penney sales fell 2.6% in the first quarter. That was the worst since 2009. Source: Opinion: These retailers give the best insight into the economy Market Watch, May 26, 2016 Oklahoma City Impact Fees The Oklahoma City Council adopted an impact fee or- insignificant amount. The City sees this as a source dinance that will be effective January 1, 2017. In short, of revenue to build streets (no doubt needed) and a tool it charges a fee to developers when they submit for their to fight sprawl. The fee is significant, up to 2 percent building permit. The amount varies both by property of development costs. In a City that has always been type and location. Property types that theoretically gen- development friendly, enacting a fee that is a disincentive erate more trips get charged more; retail is the highest. to development is a concern, particularly as it relates to And, the further you are from city-center, the more you retail. Our City is funded by sales taxes and discourag- are charged. Impact fees have generated significant ing retail development seems to be poor public policy. controversy throughout the country; most cities in this A broader based funding mechanism would make more part of country either don’t charge them or charge an sense. 4 5 2016 Mid-Year Oklahoma City Retail Market Summary NORTH SUBMARKET Total Available North Built/Updated Leasing Agent Space Space Vacant Rate 1 Rate 2 Anchor Tenants 50 Penn Place 1973/1985/2000 Newmark Grubb Levy, Beffort 86,802 48,276 55.62% $13.50 $13.50 Full Circle Books The North Oklahoma City submarket is the highest concentration of retail in the City - 6.9 million square NW 50th St & N Pennsylvania Ave Vicki Knotts Belle Isle Brewery 6900 Place 1981/1991/1992 CBRE/OKLA 49,502 7,091 14.32% $10.00 $12.00 Ted's Cafe Escondito feet of space. The area continues to be the most desired area for development and virtually all national 6900 N May Ave Ryan Storer/Stuart Graham Four Star Fitness Belle Isle Station 2000 CBRE/OKLA 433,333 6,453 1.49% $20.00 $28.00 WalMart SuperCenter tenants are represented in this submarket. Vacancy at mid-year rose to 8.1 percent after finishing 2015 at NW Expressway & N Classen Blvd Mark Inman/Stuart Graham Old Navy, Nordstrom Rack Britton Plaza Shopping Center Gerald Gamble Co. 27,340 2,550 9.33% $10.00 $10.00 Johnny's, A to Z Outlet 2648 W Britton Rd Gerald Gamble only 5.3 percent. 2.2 percent of this increase is solely attributable to the vacant Macy’s at Quail Springs Britton Square 1983 Box Real Estate 27,326 0 0% $9.50 $0.00 Kim Wah Restaurant N May Ave & NW Britton Rd Tommy Garrison Gourmet Yarn Company Mall.