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Monday, December 22, 2014
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Published: Saturday, 7/26/2014 - Updated: 4 months ago

Retail vacancies drop in area

Sales of 2 former Kmart stores in Toledo, Perrysburg fill space

BY JON CHAVEZ
BLADE BUSINESS WRITER
A real estate firm calls a drop in retail vacancies significant be-cause it occurred after Giant Eagle recently closed two area stores. A real estate firm calls a drop in retail vacancies significant be-cause it occurred after Giant Eagle recently closed two area stores.
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Vacancies among retail space in metro Toledo fell to 12.9 percent from 13.2 percent over the first six months of 2014, according to a new midyear report by the Reichle Klein Group, a local commercial real estate firm.

The vacancy rate for industrial sites in the area also declined, falling to 7.5 percent from 7.8 percent between January and June.

Reichle Klein said the drop in retail vacancies was significant because it occurred even as two large anchor spaces — Giant Eagle supermarkets — became vacant when the chain left the Toledo market.

As a result of Giant Eagle’s departure, the vacancy rate for retail anchor space increased from 9.8 percent to 11.5 percent.

But overall, vacant retail space declined because of higher demand for smaller inline retail space in retail centers. The mid-year vacancy rate for inline retail space was 14.7 percent, down from 15.8 percent at the end of 2013.

Also, according to Reichle Klein, the vacancy situation was helped by the sale of two former Kmart stores — one on Reynolds Road in Toledo to At Home stores, formerly Garden Ridge, and the other on Carronade Drive in Perrysburg to Kroger. Together the two stores have 202,347 square feet.

The average lease rate for retail space in the Toledo area fell to $7.43 a square foot from $7.62 at the end of 2013.

Reichle Klein said the rental rate declined because high-value space is primarily filled, leaving mostly less expensive space on the market.

The report added there has been new retail construction in the West Toledo/​Sylvania and Perrysburg/​Northwood corridors, but none of that space is speculative and will be fully occupied when finished.

On the industrial side, Reichle Klein said that while the vacancy rate fell slightly at midyear, overall leasing activity was flat because of a shrinking supply of available buildings.

The report said that demand for industrial space had rebounded from a soft patch the market hit last year, but the demand is being frustrated by a lack of satisfactory space. As a result, new construction is up with a total of 10 projects currently under way.

Demand is so high that despite an overall vacancy rate of 7.5 percent for industrial buildings, the vacancy rate for top-of-the-line Class A industrial space is now at just 2.6 percent, down from 5.6 percent just six months ago.

“Unfortunately, Class A buildings make up only 10 percent of the total inventory space at this time and remain a relatively small component of the market — too small to meet current demand,” the report stated.

Rents for industrial space fell to $3.08 per square foot from $3.13 per square foot at the end of 2013, Reichle Klein said.

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



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