Toledo-area retail real estate market picking up

MC Sports has relocated to this storefront on U.S. 20 in Rossford, formerly occupied by Office Depot, from a site nearby. A company executive said the outlet almost doubled its space. THE BLADE/ANDY MORRISON Enlarge | Photo Reprints

The Toledo-area retail scene, which has struggled in recent years because of excess space and too few tenants, is beginning to rebound slowly, a new industry report shows.

The retail space vacancy rate in metro Toledo fell to 14.9 percent in the first six months of the year, down from 15.2 percent for the same period a year earlier, according to local commercial real estate firm CB Richard Ellis/Reichle Klein.

The report also shows a rise in the going rental rate to $8.52 a square foot from $8.39. A higher rental rate indicates growing demand for space.

Pete Shawaker, a commercial realtor with Reichle Klein who helped prepare the report, said retail space values are at record lows and the number of buyers is increasing because of low interest rates and low sale prices.

"Maybe it's not good news if you're the seller, but it's good news for the new owners and good news for tenants," Mr. Shawaker said.

In late June, TAS Electronics bought a 13,800-square-foot former drugstore at 1510 South McCord Rd. in Springfield Township.

The property had been foreclosed upon and its previous $1.2 million price tag had been halved.

"I wouldn't call it a buying frenzy out there, but it is a definite trend of former tenants saying, 'I'm going to go buy and cut my overhead in half and have equity all at the same time,' " he said.

The grocery segment remains the most active, with two operators targeting relocations or expansion, the report said.

Formerly active segments such as fitness centers, auto parts stores, and drugstores have slowed because of market saturation, the report said.

The most active segment for the foreseeable future is likely to be discount retailing, local experts said.

For example, the largest deal in the West Toledo/Sylvania submarket was the purchase by Family Dollar stores of an 11,180-square- foot former drugstore on Alexis Road near Whiteford Road.

In the Perrysburg/Northwood submarket, sporting goods retailer MC Sports left its existing space in a shopping center on U.S. 20 to relocate to an existing space nearby that had been vacated by Office Depot.

"Our new site, it is more visible, and we also needed more space," Ed Rix, MC Sports vice president of marketing, said. "We almost doubled the space of the old location and used that added space for a hunting and fishing category, which was one of the primary reasons for the move."

Only one new retail building was constructed in the first half of 2011 -- a 17,866-square-foot Aldi supermarket on Navarre Avenue in Oregon.

Currently only two retail projects are under construction -- an auto parts store on Alexis Road in Toledo and a strip of spaces in Rossford on U.S. 20 that is mostly leased, the report said.

Contact Jon Chavez at: jchavez@theblade.com or 419-724-6128.