Tuesday, Oct 23, 2018
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Retail

Retail vacancy rate in Toledo declining

Closed big box stores remain a problem

  • ZXAM6213-JPG

    The former Applebee's at 825 Glendale Avenue.

    The Blade/Andy Morrison
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  • Anderson-store-Maumee

    The Andersons in Maumee is one of two large vacant buildings in the Toledo area that do not qualify as usable retail space anymore, according to Reichle Klein's report.

    The Blade/Jon Chavez
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    The closed Sears store at 3408 W. Central Ave. in Toledo.

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    The closed Bob Evans restaurant on Glendale Avenue.

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The vacancy rate for commercial retail space in the Toledo area has declined over the past six months and the average asking rental rate for available retail space has increased by 53 cents per square foot over that period.

But while that looks good on paper, a new midyear Toledo retail MarketView report by local commercial real estate firm the Reichle Klein Group suggests that there are big changes taking place that aren’t readily apparent.

“Retail is evolving and at this point in time we’re seeing conversion of [large vacant stores] that aren’t necessarily functional anymore,” said Duke Wheeler, a commercial real estate agent who helped prepare the report.

“We happen to be looking at something as it occurs, which is the death of a retailing format. It’s exciting times,” he said.

ZXAM6213-JPG

The former Applebee's at 825 Glendale Avenue.

The Blade/Andy Morrison
Enlarge | Buy This Image

For its midyear report, Reichle Klein took two large buildings — the former general store of The Andersons in Maumee and the former Sears store on West Central Avenue in Toledo — out of the inventory it identifies as vacant retail space. The reason?

Neither qualify as usable retail space anymore, Mr. Wheeler said.

The Andersons “has been purchased by investors who are now marketing the space for industrial uses,” the report said. The Sears store is “completely obsolescent and unlikely to be occupied again for retail purposes,” it said.

“These adjustments reflect the reality there is little or no demand for many big-box spaces,” the report added.

Overall, the vacancy rate for retail space dropped to 13.4 percent in June from 14.1 percent at the end of December. The asking rental rate rose to $8.57 per square foot in June from $8.04 in December.

But the report said some retail space landlords are going to be disappointed with the otherwise seemingly strong market: those centers in less-than-prime locations and older centers that have not been updated are drawing little to no interest from prospective tenants.

Mr. Wheeler said retail continues to evolve toward more entertainment, food, and service tenants. That puts vacant restaurants and small strip centers in demand.

“Some big boxes are dividing up and going with multiple tenants, smaller tenants,” he said. “I think there’s more demand from the ‘junior box’ user than there is from that 60,000 to 80,000-square-foot big box user.”

In fact, of larger real estate retail transactions the last six months only one, Fin Feather Fur Outfitters in Perrysburg, was a lease for a traditional retailer that sells merchandise. The rest, the report said, were restaurant users.

Among the area’s submarkets, the report said the vacancy rate dropped in the Perrysburg/​Rossford, South/​Southwest, and West Toledo/​Sylvania markets. The vacancy rate rose in the Central City, East Toledo/​Oregon/​Northwood, and North Toledo submarkets.

The amount of new construction fell from 70,240 square feet at the end of 2017 to 60,445 square feet at the end of June.

Contact Blade Business Writer Jon Chavez at jchavez@theblade.com or 419-724-6128.

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