Greater Lansing Retail Marketview
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10.0% 8.8% Greater Lansing8.0% Retail 7.0% Unemploy 6.3% MarketView 6.0% 2H 2013 CBRE Global Research and Consulting 4.0% US UNEMPLOYMENT RATE MICHIGAN UNEMPLOYMENT RATE GREATER LANSING AREA UNEMPLOYMENT RATE 7.0% 8.8%2.0% 6.3% 2H 12 1H 13 0% 2H 13 RETAIL MARKET MARKS FOURTHLansing CONSECUTIVEMichigan U.S. PERIOD OF POSITIVE GROWTH Quick Stats Chart 1: Vacancy by Submarket 2H 2013 Current Change Change 35.0% 29.4% from last from last 30.0% Year Period 25.0% 21.8% Vacancy 17.0% i i 20.0% 17.0% 14.2% Rental Rates h h 15.0% Vac. by Sub 10.3% 10.0% +110,788 SF Net Absorption h h (+1.5%) 5.0% Under Construction 40,000 SF h h 0% East North South West Mkt Avg Source: CBRE Research, 2H 2013. Hot Topics Encouraging trends and fundamentals at Delta is under construction west of I-96 first noted in the second half of 2012 on Saginaw. The new strip center brings • National retailers take greater continued throughout 2013. Absorption, strong national retailers to the area, interest in the Greater Lansing Area occupancy levels and net lease rates including Maurice’s, Ulta, Five Below, show steady signs of improvement. Retail Dress Barn and Lane Bryant. • Rental rates are increasing vacancies4.5% of leased space within the 4.1%Activity is also picking up in the East market4.0% average 17.0%, down from 18.0% Submarket’s regional 1.2 million-square- • Landlords remodeling centers to stay in 1H 2013 and down from 19.4% a year foot Meridian Mall (not included in this 3.5% competitive ago. survey), where Planet Fitness will soon Across3.0% the Greater Lansing area, property open a 23,000-square-footAbsorb. fitness center • Discount stores and thrift stores owners2.5% and investors continue to reinvent and H&M will locate its eighth Michigan expand throughout the market under-performing retail properties. This store within 18,000 square feet of a trend2.0% is visible in the East and South 30,000-square-foot mall expansion. 1.5% Submarkets,1.5% where a number of1.3% obsolete On the west side, a new 5,400-square- Notable Market Activity* strip centers have recently0.9% undergone foot Longhorn Steakhouse is under facelifts1.0% in order to compete with newer construction within the 700,000+-square- 0.3% Sears Hometown Outlet – properties.0.5% Redevelopment slated for 2014 foot Lansing Mall. will be scattered throughout the market 30,000 SF - Waverly Plaza 0% Interest from national retailers has and will include:East theNorth 46,800-square-foot South Westescalated Mkt Totalmarketwide, with users paying Planet Fitness – 23,000 SF - Trowbridge Plaza, across from Michigan top dollar to occupy new space in key State University; the 63,843-square-foot Meridian Mall areas. Struggling Class B/C properties 35.0%Delhi Village Square (South Submarket); also fared1H 12well during 2013, with over and the 10,123-square-foot long-vacated 130,000 square feet of less-than- 30.0% 2H 12 H&M – 18,000 SF - Meridian Mall former Cheeseburger in Paradise building prime retail1H 13 space absorbed by local, (West Submarket). regional 2Hand 13 nationally operated thrift 25.0%Demand for existing retail space is and overstock stores such as Salvation Tuesday Morning – 17,710 SF - 1 increasing throughout all submarkets, with Army, Habitat for Humanity, Volunteers of Frandor Shopping Center 20.2% 20.0%the East Submarket’s Frandor Shopping America,19.1% Value Land and HistoryOllie’s Bargain of Vac. 18.0% *Market data compiled ending December 30, 2013 Center a current hot spot with the recent Barn. 17.0% 15.0%additions of Tuesday Morning and With 2013 net absorption of leased Massage Green. Further, a new three- space totaling +1.5%, market recovery is building, 40,000-square-foot Marketplace 10.0% expected to carry on throughout 2014. 5.0% © 2014, CBRE, Inc. Part of the CBRE affiliate network 0% East North South West Mkt Avg Part of the CBRE affiliate network West 23% East Part of the CBRE affiliate network 38% East Market Comp. North South Part of the CBRE affiliate network South West 22% North 17% Reverse Part of the CBRE affiliate network Part of the CBRE affiliate network Reverse RETAIL MARKET STATISTICS Table 2: Market Statistics 2H 2013 Leasable Vacancy 2H 13 Asking Submarket Area Rate Absorption Lease Greater Lansing Retail | Greater Lansing Retail (SF) (%) (SF) Rates* East 2,784,300 10.3% 8,546 $11-20.00 0.3% North 1,237,889 29.4% 11,215 $6-26.00* MarketView 0.9% South 1,572,256 21.8% 20,663 $6-13.00 1.3% West 1,708,906 14.2% 70,364 $7-15.00 4.1% Market Total 7,303,351 17.0% 11,788 1.5% Note: End caps, drive-through and new centers have higher asking rates. *Eastwood Towne Center has asking lease rates up to $32.00 per square foot. Chart 3: Unemployment Rate 10.0% 8.8% The unemployment rate within the Greater Lansing MSA decreased from 8.1% in 1H 2013 to 6.3% in 2H 2013. 8.0% 7.0% Over the Unemploysame period, the Michigan unemployment rate 6.3% increased from 8.7% to 8.8%, while the U.S. 6.0% unemployment rate fell from 7.6% to 7.0% 4.0% 2.0% 2H 12 1H 13 0% 2H 13 Lansing Michigan U.S. Source: US Bureau of Labor Statistics: 2H 2013. 2 35.0% 29.4% 30.0% 25.0% 21.8% 20.0% 17.0% 14.2% 15.0% Vac. by Sub 10.3% © 2014, CBRE, Inc. Part10.0% of th e CBRE affiliate network 5.0% 0% East North South West Mkt Avg Part of the CBRE affiliate network Part of the CBRE affiliate network 4.5% 4.1% 4.0% Part of3.5% the CBRE affiliate network 3.0% Absorb. 2.5% Reverse Part of2.0% the CBRE affiliate network 1.5% 1.5% 1.3% 0.9% 1.0% Part of the CBRE 0.3%affiliate network 0.5% 0% East North South West Mkt Total 35.0% 1H 12 30.0% 2H 12 1H 13 Reverse 2H 13 25.0% 20.2% 20.0% 19.1% History of Vac. 18.0% 17.0% 15.0% 10.0% 5.0% 0% East North South West Mkt Avg West 23% East 38% East Market Comp. North South South West 22% North 17% 10.0% 8.8% 8.0% 7.0% Unemploy 6.3% 6.0% 4.0% 2.0% 2H 12 1H 13 0% 2H 13 Lansing Michigan U.S. 35.0% 29.4% 30.0% 25.0% 21.8% 20.0% 17.0% 14.2% 15.0% Vac. by Sub 10.3% 10.0% 5.0% 0% East North South West Mkt Avg 4.5% 4.1% 10.0%4.0% 3.5% 8.8% 8.0% 3.0% 7.0% Absorb.Unemploy 2.5% 6.3% 6.0% 2.0% 1.3% 1.5% 4.0%1.5% 0.9% 1.0% 0.3% 2.0%0.5% 2H 12 0% East North South West Mkt Total 1H 13 0% 2H 13 Lansing Michigan U.S. 35.0% 1H 12 30.0% 2H 12 35.0% 1H 13 29.4% 2H 13 25.0%30.0% 25.0% 20.2% 20.0% 21.8% 19.1% History of Vac. 20.0% 18.0% 17.0% 17.0% 14.2% 15.0%15.0% Vac. by Sub 10.3% 10.0% 10.0% 5.0% 0% 5.0% East North South West Mkt Avg 0% ChartEast 4 : MarketNorth Composition South West Mkt Avg MARKET COMPOSITION The Greater Lansing retail market comprises over 7.3 mil- lion square feet of leased space divided into four submarkets: East, North, South and West. The largest submarket (38%) is the East Submarket, home to Michigan State University. The 2H 2013 4.5% West 23% 4.1% smallest submarket is the North Submarket (17%),home to 4.0% East the popular Eastwood Towne center and the struggling Clark 10.0% 38% Corners (former outlet mall). 3.5% East 8.8% Market Comp. | Greater Lansing Retail 3.0% North New construction is being seen throughout the market. The 8.0% East SubmarketAbsorb. will soon welcome three privately owned South 2.5% 7.0% mixed-useUnemploy projects totaling approximately 328,000 square South 6.3% West feet in downtown East Lansing, all of which offer first floor 6.0% 2.0% 22% 1.5% retail space. Additionally, Whole Foods has received site plan 1.5% 1.3% approval to build a 35,000-square-foot store in Meridian 0.9% North Township. 4.0% 1.0% 17% 0.3% 0.5% In the North Submarket, development of The Heights at East- MarketView wood continues with two new hotels (Hyatt Place and Fairfield 2.0% 0% Source: CBRE Research, 2H 2013. East North South West Mkt Total Inn) and a mixed-use building featuring 142 units of multi- 2H 12 family housing and 15,000 square feet of first floor retail. Chart 5: History of Vacancies 1H 13 0% 2H 13 Lansing Michigan U.S. The West Submarket is also active as The Marketplace at 35.0% Delta Township (at I-96 and Saginaw Highway near Walmart) 1H 12 recently expanded by 40,000 square feet to accommodate 2H 12 30.0% Five Below, Ulta, Lane Bryant, Dress Barn and Maurice’s. In 1H 13 2H 13 addition, the former Mervyn’s wing of the Lansing Mall is be- 35.0%25.0% ing repurposed as a 12-screen Regal Theater, and the former 29.4% 30.0% Cheeseburger in Paradise restaurant will be replaced by a 20.2% 13,000-square-foot retail strip center that will house Vitamin 20.0% 19.1% History of Vac.