Oklahoma City 2012 Mid–Year Retail Market Summary TABLE OF CONTENTS Retail Market Summary 1-2 Questions/Issues of Interest 1-2 Sales Summary 3 North Submarket 4-5 Northwest Submarket 6-7 South Submarket 8-9 Edmond Submarket 10-11 West-Central Submarket 12-13 Moore / Norman Submarket 14-15 Eastern OK County Submarket 16-17 Special Report: Allison Barta Bailey Back Cover 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 2012 Mid–Year Retail Market Summary THE RetaIL MARKet After several periods of improvement, the name a few. Equally exciting are the new OKC TOTAL RETAIL MARKET INVENTORY vacancy for the first half of 2012 ticked up ever concepts being introduced by some existing 50 so slightly, to 9.9 percent from 9.8 percent tenants. Mathis Brothers is rolling out their GLA SF Freestanding SF at year-end. There remains a lot of positive Sleep Center concept, Buy for Less opened 40 news: national tenants are becoming more their Uptown Grocer in Edmond, and the new 30 active; a number of new tenants are looking Crest Market at 104th and south May is an for space in our market, newer centers are upgrade from the traditional Crest Store. 20 routinely full, a number of additions to existing (millions of square feet) (millions of square centers are underway, and developers are In addition, several existing grocery retailers 10 dusting off plans for new projects. So, why are in the process of adding a number of new 0 the lack of improvement in the numbers? A locations, including Sam’s Club, Aldi, Save- 2008 2009 2010 2011 2012 number of the larger vacancies have already A-Lot, and Walmart Neighborhood Market. been absorbed, leaving less room for big OKC TOTAL RETAIL MARKET VACANCY box gains. But, the primary reason for the What new retailers are coming? Several 15% increase is a slight softening in the local tenants are on their way. Dick’s Sporting tenant market. The local tenant market is Goods has four stores under construction: 12% always more volatile and many have been Fritts Farm, Westgate Marketplace, Midwest 9% stretched over the last three years in a very City Town Center, and Shops at Quail Springs price competitive retail environment. Allison on north Pennsylvania. Outlet Shoppes of 6% Barta Bailey refers to some of these pressures Oklahoma is adding 28,000 square feet of and some possible ways out in her article on space and bringing Columbia Sports, Ann 3% the back cover. Taylor LOFT, Waterford, Kenneth Cole, and 0% Lucky Brand among others. LA Fitness has 2008 2009 2010 2011 2012 Despite our concerns about this sector of inked a couple of deals and plans to open the market, we believe it is a pause and the four or five stores. Soma is about to open OKC TOTAL RETAIL MARKET ABSORPTION overall market will continue to improve over at Springcreek. Other tenants are close to 0.2 the rest of the year. The positives significantly finalizing deals, including Aspen Dental, Home 0.1 outweigh the negatives as reflected in the Goods, Nordstrom Rack. 0.0 performance of most submarkets. Four of -0.1 -0.2 the submarkets, North, West Central, South Who might Come? There are a number of -0.3 & Eastern Oklahoma County actually saw a tenants who have looked in our market and -0.4 small improvement in occupancies. Moore/ may or may not come depending on whether -0.5 (millions of square feet) (millions of square Norman had a modest decline. The most or not they can find the right location and the -0.6 significant negative changes occurred in right co-tenancy. The highest profile of this -0.7 -0.8 Edmond and Northwest; we’ll review those group is Costco; they’ve hired local brokers 2008 2009 2010 2011 2012 submarkets in more detail later in this report. and are actively seeking locations. Costco has done this previously and not pulled the trigger but seem more serious this time. We’ll before we see most of them. Having said that, QUestIons/IssUes OF InteRest see. Others include the Container Store, we firmly believe that Oklahoma City could Trader Joe’s, Lululemon, Fresh Market and support a more upscale shopping center; we What new retailers and concepts are Von Mauer Department Store. have the incomes equal to or greater than here? A testament to the good things many of our competitive cities, our challenge going on in our market is the number of new Who probably isn’t coming anytime being that our higher income households tend tenants, including Anthropologie, Whole soon? Let’s put Ikea at the top of this list. to be scattered throughout the city. It will take Foods, Sunflower Market (recently bought Crate & Barrel, Lifetime Fitness, Nordstrom, a developer and retailers who understand by Sprouts), the Meat House, Monarch and pretty much any tenant from Italy or that we’ll drive further and spend more than Dental, Gold’s Gym, Natural Grocers, Nothing France. Oklahoma City’s problem attracting their typical formulas suggest. If Wichita and Bundt Cakes, Ideal Image, Torrid and lots these higher end tenants comes down to Little Rock have lifestyle centers, why not us? of restaurants – Smashburger, Freebirds, demographics; we do not have the incomes Genghis Grill, Chuy’s, 5 Guys Burgers – to or density they require. So it will be a while 1 square foot expansion of the Outlet Shoppes It will be interesting to follow the development of Oklahoma is underway along with some of these strategies and their effect on sales. restaurant outparcels. Outlook for 2012 and Beyond – The We are getting closer to new development. market will continue to improve with the An announcement is expected soon on a addition of new retailers and the expansion large tenant/tenants to kick off the Shoppes of existing retailers as noted above. We at Fox Lake at 15th and I-35 in Edmond. best foresee the announcement of two or three guess, a new Sam’s Club. The Covell & I-35 new developments in the near term. The project in Edmond is being marketed. A softness in the local tenant sector bears project or two along the Memorial corridor watching although we anticipate recovery could be announced later in the year. And, over the next year to 18 months. The overall the 89,000 square foot Shops at North market improvement will remain measured Village is being pre-leased. More are in the given the uncertainties in the national works and, while some will not happen, the economy and the sluggish natural gas momentum is building for new development. market. Concern about the issues swirling around Chesapeake could affect the market What are retailers doing to address if energy employment declines significantly. Submarket Map internet sales and social media But, market fundamentals are moving in the marketing? Strategies vary greatly among right direction and we are positive about the retailers. Many are beefing up their own future for Oklahoma City retail. What new construction is underway? web offerings and making their web sites A number of existing centers are expanding more like their stores. Some have bought and/or adding freestanding buildings. We small online retailers to gain their internet SURVEY Footnote: referenced the Dick’s Sporting Goods expertise. Walmart is adding stations at their buildings, three of which are expansions stores where you can pick up online orders Our survey tracks 27.4 million square feet of existing successful centers. The fourth (at the back of course so you’ll shop while in 233 buildings of over 25,000 square feet Dick’s at the Shops at Quail Springs will you are there). Target is asking suppliers and 12.4 million square feet of stand-alone include some junior anchor space and to provide them with proprietary products buildings for a total market of 39.8 million restaurant outparcels. University North that can’t be purchased over the internet. square feet. Park is pre-leasing a second small strip Target has also rolled out the use of Shopkick outparcel; the Mathis Brothers’ Sleep Center nationwide to enhance its social marketing. There continues to be a significant number is nearly complete. There will be a similar Recently, 18 national retailers announced of smaller strip centers in the market (under 16,000 s.f. strip in front of the Dick’s at that they would accept Paypal for payment 25,000 s.f. in size). We would estimate there Fritts Farm and GBR is working on a strip at their stores. Retailers have awakened to are easily 3 million square feet of these center just across 19th street. The 28,000 the opportunities and threats of the internet. properties in the market. 149th in Moore GLA SF Vacant SF Vacant % OKC Retail Market Totals 27,422,348 2,724,751 9.94% 2 Shoppes on Memorial S ales Sales SUmmaRY SU mma Property Address Year Built City SF Sales Price Price/SF RY RY Mustang Trade Center 345 N Trade Center Terrace 1984 Mustang 36,324 $2,217,000 $61.03 May Ten Trade Center 2927 NW 10th St 1970 OKC 41,325 $1,462,000 $35.38 Southpointe 8003 S Western 1981 OKC 22,600 $1,300,000 $57.52 Walnut Village 12301 N Rockwell 1986 OKC 53,800 $4,850,000 $90.15 Sears Quail Springs Mall 1980 OKC 182,000 $8,000,000 $43.96 Lightning Creek 8113 S.