Common House Flipping Mistakes and How to Avoid Them
Columbus OH Retail Trends Q3 2011
1. Q3 2011 | RETAIL
GREATER COLUMBUS REGION
RETAIL TRENDS REPORT
Slow Growth Continues
COLUMBUS REGION OVERVIEW
The Columbus retail market finished the third quarter 2011 with moderate positive absorption of
118,454 square feet. This marks the sixth consecutive quarter of positive absorption beginning in the
second quarter 2010. It hasn’t been smooth sailing as news that consumer demand and confidence
remains generally stagnant over the past six months. Economic data released recently such as jobs
report, the economy added 103,000 jobs in September, and The Conference Board’s analysis of
leading economic indicators at .03 percent growth suggests that the economy is not headed for
MARKET INDICATORS another recession. This will hopefully engender more consumer confidence. Continued on page 2
Q3 Q4
2011 2011*
FORECASTS AND REFLECTIONS
VACANCY • The retail vacancy rate has steadily decreased between the Campus Gateway and the Short
through leasing as well as expansion of North. The 44,000 square foot Rave Theatre
NET ABSORPTION product. The additional 340,000 square feet and the 55,000 square foot Hobby Lobby was
CONSTRUCTION — of new product and the moderately strong completed in Grove City. 40,000 square feet
positive leasing this year in first and third are going up at New Market Mall, 7588-7674
RENTAL RATES — quarters have driven the vacancy rates lower. New Market Center Way, and Earth Fare
• In construction news, the Kroger in the Short organic grocery is building a 27,000-square-
*Projected change to following quarter
North was rebuilt and now stands at 59,302 foot space in Polaris.
square feet and anchors the block of transition
RENTAL RATES
STEADILY UPWARD VACANCY RATE OVER COMPLETIONS AND ABSORPTIONS
Asking Rates
The average asking
1,200,000 13.5% rental rates decreased in
$16.00 strip, neighborhood, and
Completions and Absorptions
1,000,000
13.0% community. The
800,000
$14.00 600,000 12.5% softening of prices this
Vacancy Rate
quarter was a fairly
Rental Rates
400,000 12.0%
200,000 significant drop in the
$12.00
0 11.5% average. One explanation
‐200,000 may be that asking rates
11.0%
$10.00
‐400,000 are better reflecting
‐600,000
10.5% leasing rates or another
$8.00 explanation may be that
‐800,000 10.0%
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q general demand for
2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q
08 08 08 08 09 09 09 09 10 10 10 10 11 11 11
08 08 08 09 09 09 09 10 10 10 10 11 11 11 product is not as strong
as some of the larger
Strip Neighborhood Community
Completions Absorption Vacancy Rate leases would suggest.
www.colliers.com/columbus
2. RESEARCH & FORECAST REPORT | Q3 2011 | RETAIL | GREATER COLUMBUS REGION
Asking rates fell steeply for a majority of product CONSTRUCTION
Delaware County
type. As explained on page one, there are Both the 44,000-square-foot Rave movie theatre
Union
County numerous possible explanations. It may be that and the nearby 55,000-square-foot Hobby Lobby
North /
asking rates are better reflecting leasing rates or Project in Grove City completed in the third
Licking
Northwest
Northeast
County it may be that general demand for product is not quarter.
as strong as some of the larger leases would
On Sawmill Rd. & I-270, a portion of New Market
suggest. The activity in the third quarter suggests
mall is being demolished and they will be
Madison CBD the latter explanation with a majority of the
County constructing a the building that formerly housed
Southeast absorption coming from Shopper’s World’s lease
Comp USA will make room for two additional
Southwest of the Great Western Shopping Center. Another
Fairfield restaurant spaces (Logan’s Steakhouse and an
County possible explanation may be that the better
IHOP), an 80-room, yet-to-be-announced hotel
Pickaway County positioned markets are more fully leased than
and an additional 40,000 square feet of retail
the least well positioned product. We suspect it
space.
is a combination of the two of these factors. The
The Columbus retail market includes 11
strongest prices had generally been in Northwest,
suburban submarkets and the Central Some smaller construction projects are
Business District. A total inventory of 55 Northeast and North Delaware. These are
underway as well. A small strip center and an
million square feet of space with only 1 submarkets for which the vacancy rates have
IHOP are under construction at Renner and
million of that space in the CBD. decreased substantially.
Hilliard-Rome Road. Freestanding Piada (Italian
fast casual eatery) under construction along
MARKET ACTIVITY Sawmill Rd. in Dublin. Block walls are up for the
Market Activity Volume is the sum of the 27,000 square foot Earth Fare organic grocery
absolute value of each absorption change in the on Gemini Parkway in Polaris market which is
market and it tells us a little more about what scheduled to open in early 2012.
exactly happened to the market behind the
absorption number. The Market Activity Volume
was 500,960 square feet which is the largest
amount of change in one quarter since before
Q1 2009. Net positive absorption in the market,
1.8 million square feet, explains only 28 percent
of the changes that occurred this quarter.
UPDATE New Supply, Absorption and Vacancy Rates
SALES ACTIVITY
PROPERTY ADDRESS SALES DATE SALE PRICE SIZE SF GRANTOR GRANTEE PRICE / SF TYPE SUBMARKET
8457 Sancus Blvd 8/3/2011 $5,975,000.00 34,316 Polaris Sancus Retail MFC Polaris I Venture $174.12 Neighborhood Northeast
LLC Investments LLC
2812 Fishinger Rd 7/29/2011 $40,000.00 26,657 - - $1.50 Neighborhood Northwest
765 High St 7/29/2011 $130,000.00 25,000 Lahoti Properties LTD CMH Midtown Properties $5.20 General Central
5200 Post Rd 9/2/2011 $1,250,000.00 17,314 $72.20 Automotive Northwest
4339-4367 East Main 7/12/2011 $525,000.00 11,800 Farber Holdings LLC Ioannis Zissis $44.49 Neighborhood Southeast
Street
5805 Chantry Drive 7/14/2011 $1,060,000.00 11,500 Brian Ross Haim Sakal $92.17 Free-standing Southeast
LEASE ACTIVITY
PROPERTY ADDRESS LEASE SF LESSOR LESSEE ASKING PRICE TYPE SUBMARKET
1214 Hill Rd 65,000 Meyer Development Enterprises LLC Variety Wholesale $5.00 Neighborhood Fairfield
2100 Morse Road 47,500 Mc-Nc LLC N/A $10.00 Neighborhood Northeast
9100 Jacksontown Road 30,000 N/A N/A $2.00 Other Licking County
2640-2736 Brice Road 15,426 Hk New Plan Exchange Property Family Dollar - Power Southeast
Owner Ii LP
2-98 Consumer Drive 10,400 Midwest Motoplex LLC Halloween City - Lifestyle Northeast
P. 2 | COLLIERS INTERNATIONAL
3. RESEARCH & FORECAST REPORT | Q3 2011 | RETAIL | GREATER COLUMBUS REGION
UPDATE Market Comparisons
RETAIL MARKET
Net Absorption Construction Asking Rental Rates
SUBMARKET Total SF Vacant SF Vacancy % Current Quarter Year-to-date Current Completions Neighborhood Power
CBD 986,975 22,918 2.3% 42,452 29,185 - - - -
FAIRFIELD 3,418,174 440,942 12.9% (35,850) 3,825 - - - $10.17
LICKING 3,250,240 329,901 10.2% (21,706) (7,097) - - - $8.97
MADISON 443,304 9,285 2.1% (4,000) (4,000) - - - $10.00
NORTH DELAWARE 1,780,118 291,870 16.4% (3,436) 6,995 - - $22.50 $11.82
NORTHEAST 15,377,808 1,064,210 6.9% (4,874) 57,516 - - $10.00 $12.76
NORTHWEST 13,017,379 1,160,454 8.9% (10,651) (19,033) 67,000 - $20.00 $11.77
PICKAWAY 694,724 17,582 2.5% - (6,615) - - - $8.50
SOUTHEAST 9,459,758 1,250,063 13.2% 14,624 113,615 - - $19.50 $7.90
SOUTHWEST 6,905,523 1,665,731 24.1% 140,695 171,674 - 109,000 $6.26 $8.60
UNION 1,157,257 47,652 4.1% 1,200 (1,075) - - $18.00 -
TOTALS 56,491,260 6,300,608 11.2% 118,454 344,990 67,000 109,000 $12.05 $10.35
Net Absorption Construction Asking Rental Rates
PROPERTY TYPE Total SF Vacant SF Vacancy % Current Quarter Year-to-date Current Completions
COMMUNITY 8,999,075 1,119,308 12.4% 448 58,936 - - $13.42
FREE-STANDING 7,931,067 549,280 6.9% - 19,968 - 109,000 $7.02
NEIGHBORHOOD 17,397,813 2,497,705 14.4% (82,467) (17,089) 67,000 - $10.35
OTHER 27,000 4,610 17.1% - 4,010 - - -
OUTLET 184,000 - 0.0% - - - - -
POWER 5,272,202 286,627 5.4% 139,640 167,293 - - $12.05
REGIONAL 3,828,626 439,162 11.5% - 97,353 - - $10.39
SPECIALTY 250,000 17,108 6.8% 42,452 20,830 - - -
STRIP 5,448,505 737,453 13.5% 18,381 (10,656) - - $11.53
SUPER REGIONAL 6,530,997 648,155 9.9% - - - - -
URBAN 621,975 1,200 0.2% - 4,345 - - -
TOTALS 56,491,260 6,300,608 11.2% 118,454 344,990 67,000 109,000 $10.76
QUARTERLY COMPARISON AND TOTALS
Net Absorption Construction Asking Rental Rates
QUARTER, YEAR Total SF Vacant SF Vacancy % Current Quarter Year-to-date Current Completions Neighborhood Power
Q2, 2011 56,392,260 6,425,462 11.4 30,507 226,536 109,000 240,000 $11.43 $18.31
Q1, 2011 55,896,613 6,439,929 11.52 195,989 195,989 336,000 255,647 $11.46 $17.89
Q4, 2010 56,019,350 6,663,024 11.9 57,808 274,518 541,647 110,000 $11.05 $12.50
Q3, 2010 56,019,350 6,720,832 12.0 236,129 216,710 595,647 176,250 $11.68 $14.57
MINIMUM WAGE
The minimum wage will be increased
across Ohio by $.30 to $7.70 effective
January 1, 2012. The minimum wage
for tipped employees will climb 15
cents to $3.85 an hour. The rise is a
part of a scheduled increase tied to
consumer prices.
COLLIERS INTERNATIONAL | P. 3
4. RESEARCH & FORECAST REPORT | Q3 2011 | RETAIL | GREATER COLUMBUS REGION
CBD Marginal vacancy changes occurred in both
The Central Business District (CBD). Leasing Madison and Union Counties. Staples shopping
was driven by South Campus Gateway as the center torn down on the west side. 512 offices in
submarket gained more than 40,000 square feet
of space. FUNDAMENTALS
61 countries on
Three sources are instructive for retail consumer 6 continents
A new plan is in motion for Nationwide Arena to
activity. First, the consumer confidence index,
become a publicly owned venue leaving United States: 125
the second is a weekly poll conducted by Gallup, Canada: 38
Nationwide Insurance and the Dispatch Printing
and the third is the Beige Book produced by the Latin America: 18
Co. as minority owners. The Convention Facilities Asia Pacific: 214
Federal Reserve Bank semi-quarterly.
Authority, the government entity that is the EMEA: 117
landlord for the Greater Columbus Convention
The consumer confidence index is produced by • $1.5 billion in annual revenue
Center, would purchase arena for $42.5 million
The Conference Board and is a survey of how • 978.6 million square feet under
and assume management of the property. The
confident consumers are in the current economic management
Conventional Facilities Authority would borrow
conditions by their spending and saving habits. • Over 12,500 professionals
$43.3 million from Nationwide and $10 million
In August, the index was 45.2, decreasing by
from the Ohio Department of Development.
roughly 16 basis points from 59.5 in July. In GREATER COLUMBUS REGION
September the index had increased slightly to
NORTH Richard B. Schuen SIOR CCIM
45.4. The index was 112.5 in July 2007, six CEO | Principal | Columbus
The north submarkets include Northwest, months before beginning of the recession. 8800 Lyra Drive
Northeast, and North Delaware. Sears Hardware Suite #150
27,000 is vacating the Graceland Shopping Gallup’s consumer spending measure tracks the Columbus, Ohio, 43240
Center at High Street and Morris Road in average dollar amount Americans report TEL +1 614 410 5612
Clintonville is. Big Lots opened in the front half of spending or charging on a daily basis, not
former-Big Bear site on Hill Road and Refugee counting the purchase of a home, motor vehicle, Leslie Hobbs
Road. or normal household bills. Over the three month Marketing and Research Manager
period between July and September the 14-day 8800 Lyra Drive
rolling average fell from $65 to $63 with a high Suite #150
SOUTH of $75 on July 31. The high mark of the 3-day Columbus, Ohio, 43240
The southern submarkets are Southeast and TEL +1 614 410 5640
rolling average was also on July 31 at $91. There
Southwest. Hobby Lobby and Kohl’s at the corner was very little variation over the three month
of Georgesville Road and Broad Street. The period as retail sales stagnated. Jonathan Badgley
largest lease of the quarter happened in the Research Analyst
Southwest at the Great Western Shopping The Cleveland Federal Reserve reports on 175 South Third Street
Center, as Shopper’s World leased more than consumer spending twice a quarter in the Beige Suite # 285
136,000 square feet. Book. The data for these reports comes from Columbus, Ohio 43201
TEL +1 614 437 4495
qualitative surveys of retailers in the fourth
EAST district, which includes Columbus. In September,
the reserve bank reported that retailers indicated
The east submarkets are Licking and Fairfield
an increase in sales in the period from early July
Counties. Licking and Fairfield Counties lost
through mid-August were on or ahead of
35,000 square feet and 21,000 square feet
schedule. Most retailers surveyed expected
respectively. This document/email has been prepared by Colliers
sales to rise in the low to mid-single digits on a International for advertising purposes. Colliers
year-over-year basis. Capital outlays remain on International statistics and data are audited annually and
WEST plan and the hiring outlook shows no expansion.
may result in revisions to previously reported quarterly
and final year-end figures. Sources include Columbus
The west submarkets include Union and Madison Dispatch, Business First, Xceligent, Wall Street Journal,
Bureau of Labor Statistics, Bureau of Economic
Counties. Low population in these submarkets Analysis, Gallup, and the Cleveland Federal Reserve.
means that competition between retailers is less
fierce than higher populated areas of Columbus.
Accelerating success.
www.colliers.com/columbus