Franklin Park area no longer Toledo's 'Rodeo Drive'
8/22/2010Commercial real estate agent Joe Belinske never thought retail life could be like it is today on Monroe Street near Westfield Franklin Park mall.
"Monroe Street used to rent itself. People never put out 'For Lease' sign. You didn't have to market it," said Mr. Belinske of CB Richard Ellis/Reichle Klein, a Toledo commercial real estate firm.
But these days all along the Monroe Street-Talmadge Avenue corridor - the Toledo area's crown jewel of commercial real estate - times are tough.
"For Lease" signs have proliferated on Monroe from Sylvania Avenue past Talmadge to the Target shopping plaza. Some of the signs feature a shocking indicator of hard times: "Free rent."
VIEW MAP: Prime Toledo Retail Corridor
Area rents have fallen significantly, and what was the price for hidden space in strip malls that looked away from the road, is the going price for better sites that look straight out onto Monroe.
Several large signature properties - the closed Circuit City store and former Lone Star Steakhouse on Monroe, and the Smokey Bones Barbeque and Grill on Talmadge - have remained closed for more than 18 months.
Also worrisome, commercial real estate experts say, is it seems like more small retailers have left the retail corridor than have arrived in the last few years.
As Steve Speranza, local real estate assets manager, sees it, the sluggish economy has exposed development mistakes on Monroe-Talmadge.
"You're seeing sins of the past coming home to roost - overbuilding, things being built in places they shouldn't have been built," said Mr. Speranza, of Tolson Enterprises, a firm owned by local commercial real estate investor Harvey Tolson.
"Retail centers are being stressed, obviously, by the lack of growth of jobs and income," Mr. Speranza said. "So what's transpiring is survival of the fittest."
The Monroe-Talmadge area "is still the strongest in Toledo," real estate agent Sam Zyndorf of the Toledo office of Signature Associates, a commercial real estate firm, said. "But the problem is retailing itself is going through a dramatic change. Tenants are closing and retailers are contracting," he said.
In 1998 Mr. Zyndorf dubbed the Monroe Street corridor Toledo's version of Hollywood's Rodeo Drive. Rents had risen to $16 a square foot per year, or 33 percent higher than five years earlier.
In 2007, area property was even pricier because of the mall expansion in 2005. Land near the mall was selling for $1 million an acre and prices were rising 10 percent annually.
Space in the Talmadge Town Center, a strip mall on Talmadge near Sylvania Avenue developed by the former Timberstone Development, was rented at $28 a square foot per year, while a newer strip center nearby was leasing space for $33 per square foot, Mr. Zyndorf said.
"There were some outrageous rent prices …" agreed Nick Tokles, who has seen the Monroe Street corridor rise and fall in the 31 years he's owned Nick & Jimmy's Bar and Grill on Monroe Street.
"People were asking $25 and $30 a square foot in rent. Then there were your insurance and taxes on top of that," he said.
Then the bottom fell out of the Toledo and U.S. economies.
Proximity to Westfield Franklin Park "is no longer a guarantee you'll make big money," Mr. Tokles said. "It's not a guarantee you'll make enough to even to pay the rent."
Mr. Zyndorf estimates rents today in the Monroe Street corridor have fallen from an average of $16 to $18 just a few years ago to $14 or $15 a square foot for desirable space and $11 to $12 for less desirable space.
Rents climbed in the early to mid-'90s into the high teens, and then the low $20s by 2005. But since 2008, rates have flattened or decreased with tenants taking advantage of rising vacancies to seek decreases when leases expire.
Bill Tadsen, owner of William Tadsen Fine Jewelers at 4956 Monroe, is among those who'll likely seek a rent decrease in February when his lease is up. "I told them the last time I couldn't pay any more rent because my business is down," he said.
Bolstering his case: The suite next door has been vacant two years. "I don't think they need another vacancy," he said.
Mr. Tadsen, who has been on Monroe Street 14 years, said he recently counted 45 "For Lease" signs on Monroe between the U.S. 23 interchange in Sylvania and his shop.
"It's definitely changed in the last three or four years," he said.
One of the biggest changes are the "Free Rent" signs prominent at two strip centers, the Monroe Street Plaza at 5200 Monroe and the Marketplace West Shoppes at 4750 Monroe.
Mr. Belinske, who is marketing Monroe Street Plaza, said the offers are an aggressive move by landlords to attract tenants.
Mr. Zyndorf, who is marketing Marketplace West Shoppes, said the offers are rare because they are openly advertised. Some such promotions were given privately in the past, he said.
Pat Giammarco, the founder of Marco's Pizza who owns two strip centers on Monroe Street, said he thinks the "Free Rent" signs are unnecessary and "almost insulting."
But "it's been tough leasing anything around here in the last year," Mr. Giammarco said.
His two centers - one next to Marco's headquarters at 5248 Monroe, the other at 5300 Monroe - are filled. But a building he owns at 4906 Monroe that recently housed England Custom Furniture, has a 12,000-square-foot vacancy.
"It will be tough to lease that unless I split it up," Mr. Giammarco said.
"I don't see it filling up soon. I think it's going to be bleak for another few years," he said.
Mr. Zyndorf said there is some retail space demand in the Toledo area, but mostly it is for under 10,000 square feet or for large mega-boxes. "There's just not a demand for the 20,000 to 40,000-square-foot spaces," he said.
That likely means no quick solution for the empty Lone Star Steakhouse restaurant at 5060 Monroe or the adjacent vacant Pizza Hut building. Also, the Circuit City building at 4948 is not likely to get a permanent tenant anytime soon, although it will be used as a temporary Halloween store in the near future.
The Smokey Bones Barbeque & Grill at 4155 Talmadge has been vacant since 2007, but real estate experts say the site's owner, Darden Restaurant's Inc., has talked of placing a new restaurant there for some time, though nothing has happened so far.
Mr. Speranza said Tolson Enterprises is trying to fill vacancies at its Talmadge Town Center and is taking offers on its vacant lot at Talmadge and Sylvania Avenue.
"We're in negotiations with two different users and a possible third on the [vacant] lot. But nothing's going to happen overnight. We're trying to get the process started," he said.
Jeff Jaffe, owner of Harold Jaffe Jewelers at 4217 Talmadge, knows things have been tough, but is optimistic the situation will improve as the economy recovers.
"I think right now the problem is the banks aren't willing to help anybody out to get into a business situation," he said. "We've seen lots of changes, but in my opinion the market seems to be picking up a little bit."
Toledo City Councilman Tom Waniewski, whose district encompasses the Monroe-Talmadge corridor, is optimistic.
"I think what is happening now is indicative of the market in general," he said. "People aren't investing and entrepreneurs who would put up a business or start something on a highly traveled corridor are just not doing anything and the banks aren't giving them loans.
"But it'll bounce back."
Still, Mr. Zyndorf said, people may not see a return of traditional retailers to the corridor.
"A lot of these boxes will become medical," he said. "It's already started with optical and there's dental going in everywhere," Mr. Zyndorf said.
The important thing, he added, is that the vacant space gets filled.
Contact Jon Chavez at:
jchavez@theblade.com
or 419-724-6128.