The Toledo-area retail market improved considerably in 2013, fueled by new stores or expansions that pushed the overall vacancy rate down a full percentage point from the previous year.
According to the year-end report from Toledo commercial real estate firm the Reichle Klein Group, the overall retail vacancy rate shrunk to 13.2 percent last year from 14.2 percent a year earlier.
Perhaps even more impressive, the vacancy rate for anchor store spaces dropped to 9.8 percent from 13 percent a year ago, according to the report. The decline marked the first time since 2004 that the vacancy rate for anchor spaces in the Toledo market has been below 10 percent.
Overall, the retail market absorbed 377,150 square feet of vacant space in just the last six months and a total of 729,000 square feet for the year.
“You’re seeing a continued recovery for certain, and it’s definitely a pleasant thing to see,” said Kurt Pollex, a commercial real estate agent with the Reichle Klein Group who helped prepare the report.
“The big box properties have either been resurfaced or filled. And the big box eyesores — the vacant cinemas — have been taken down. It’s certainly more appealing visually, and the improvement makes less space available,” Mr. Pollex said.
Reichle Klein said that a large factor in the reduced vacancy rate is the “redevelopment or repurposing” of commercial sites in the Toledo area instead of new development on greenfield sites, a process that remains dormant.
Speculative construction “just isn’t there and it will take time for that without having a tenant,” Mr. Pollex said.
“When there’s available property at prices where the deals make sense … and if you have a site that’s near the population density, there’s no need to move out and build out in the farm fields because it’s tough to get customers to come to you out there,” he said.
Assessing the various submarkets in the area, the report said that vacancy rate declined in the Central Business District, the East Toledo/Oregon area, the South/Southwest area, and the West Toledo/Sylvania area.
The rate increased in just two areas: Perrysburg/Northwood and North Toledo. Reichle Klein said that vacancies actually decreased in Perrysburg but rose in Northwood, which had 210,000 square feet of anchor space go vacant. A big chunk of that was The Andersons store at the former Woodville Mall.
North Toledo, the report said, continues to suffer from a legacy of overbuilding of big box stores and power centers in the 1980s and 1990s. Demand for that vacant space in North Toledo hasn’t rebounded, Reichle Klein said.
The average asking lease rate for retail space declined in 2013 to $7.62 per square foot from $8.19 a year earlier. The lease rate for anchor space dropped to $5.26 per square foot from $6.19, but the lease rate for strip center inline space rose slightly to $10.72 per square foot from $10.48 as demand for inline space heated up.
The report said the decline in the overall vacancy rate was fueled by several high-profile projects that removed existing vacant space or filled unused space.
The list included the new Art Van Furniture store in Holland, built on the site of a former cinema complex, a new Kroger in Maumee, built on the site of an auto dealership, an Aldi store on Alexis Road in Toledo, and several new Dollar General stores.
Gabe’s filled the long-vacant Media Play site in the Shops at Franklin Place on Monroe Street in Sylvania Township. The report said the complex’s owners are in negotiations with two clothing retailers to fill additional space it plans to build on the Franklin Place site.
Devonshire REIT, which owns the Shops at Franklin Place, would neither confirm nor deny reports that the two new additions would be stores from the TJX Cos. chain, possibly a Marshalls and either a TJ Maxx or a HomeGoods store.
Also, Reichle Klein said several other noteworthy projects are still in construction — a Mattress Firm store next door to the Art Van store, a Rite Aid store in Waterville, and a Camping World store adjacent to Bass Pro Shops in Rossford. Retail chains Dollar General, Family Dollar, and Dollar Tree are near the end of their rapid expansion phases, but are still actively seeking store sites, the report added.
“Throw in the possibility of more nice things on Secor Road and it’s positive news,” Mr. Pollex said. “Starlight Plaza [in Sylvania] will be repurposed. There’s just a lot of good things coming on and more good things to come.”
Mr. Pollex said a deal is close to being finalized to occupy the former Circuit City store on Airport Highway, and negotiations are ongoing with a potential user interested in the former Kmart store on Reynolds Road. He would not reveal the potential occupants.
“In my mind, I like the steady-to-slow new construction and the reuse that happening now rather than having 2 million square feet under construction,” Mr. Pollex said.
“We will see a few more restaurants move into the marketplace over the next year,” he said, also noting that Tim Horton’s has signed a deal to replace the former Lone Star Steakhouse on Airport Highway.
Contact Jon Chavez at: email@example.com or 419-724-6128.