Toledo-area landlords are slashing rates and deferring rent payments to help retail tenants stay afloat in the worst economic slump in more than 25 years, local commercial real estate experts say.
But that couldn't stop vacancy rates for stores, shops, and restaurants from soaring to 14.6 percent at midyear - their highest level in at least nine years, according to a report from Toledo commercial realty firm CB Richard Ellis/Reichle Klein. That was up from 14 percent at the end of 2008.
Even so, commercial real estate experts say the situation isn't as bad as they had expected after a dismal 2008 Christmas shopping season.
"It's bad, but it's not terrible," said Germano Bressan of the Toledo office of Signature Associates Inc.
"I don't see mass exodus from shopping centers," he added.
Some businesses, including fitness chains and automotive parts stores, are adding locations in the area, experts said.
Still, the local rate is significantly higher than the 12 percent seen nationally for available retail space in the second quarter, according to CB Richard Ellis/Reichle Klein.
The largest concentration of vacancies was in Perrysburg/Northwood, where nearly 21 percent of 3 million square feet of store space was empty. Major factors include the closing of the large Kmart store in Perrysburg, experts said.
The next highest number of vacancies was in North Toledo, at 19 percent, the report said.
Closings include Dollar Plus USA, off Conant Street in Maumee, which shut its doors in recent weeks just eight months after opening.
The telephone for a second Dollar Plus location, off McCord Road in Springfield Township, has been disconnected.
The Elder-Beerman department store chain has said it will close its store in the Woodville Mall in Northwood in mid-September.
Officials at CB Richard Ellis/Reichle Klein said the vacancy rate is the highest since the firm began surveying retail space in 2000.
"There are a lot of people hanging on by a thread," said Mr. Bressan of Signature Associates. "They are surviving day to day. If things get a whole lot worse, they won't make it."
Landlords have helped to avert failures by renegotiating rental agreements, reducing monthly rent rates, and allowing tenants in multiyear leases to put off paying rent for two or three years, said Duke Wheeler, a retail expert at CB Richard Ellis/Reichle Klein.
To qualify, tenants typically were required to show that they had experienced a significant drop in sales, Mr. Wheeler said.
"It's a difficult time for tenants and landlords," he added. Average lease rates, at $8.77 a square foot annually, were up slightly from June, 2008, but unchanged from the end of 2008.
Vacancies were up midyear for other types of commercial property. Office vacancies rose to 18 percent from 17.3 percent at the end of 2008. Industrial vacancies increased to 12 percent from 10.7 percent.
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