Empty storefronts become a bit more prominent in Lawrence, new report shows; vacancy rate hits recent high
With all this talk of a federal government shutdown, the natural question is whether it would include presidential cellphone service? I don’t have insight into that, but this is the time of year that Lawrence leaders look at another type of shutdown: how many businesses have closed and how many empty storefronts are left as a result. The short answer is vacancy rates were up a bit in 2017.
The Lawrence branch of the commercial real estate firm Colliers International puts together a report on vacancy rates of retail, office and industrial space throughout Lawrence. The retail vacancy rate frequently is a topic of conversation in some political circles, as Lawrence is never very far away from a debate on whether new retail projects should be allowed to locate in town.
This year’s numbers probably will fuel some of that. The retail vacancy rate climbed to 7.5 percent, up from 5.2 percent at the end of 2016. While that is not a huge jump, it is Lawrence’s highest retail vacancy rate in the last decade, according to the Colliers report. The 7.5 percent vacancy rate also is higher than the national and Kansas City metro averages. The K.C. retail vacancy rate is about 6 percent, according to Colliers, while the national average is about 4.5 percent. This is the first time in the last decade that Lawrence’s vacancy rate has been higher than the Kansas City vacancy rate.
The areas with the highest vacancy rates are perhaps predictable: East 23rd Street and West 23rd Street. Why predictable? Traffic patterns are changing as a result of the South Lawrence Trafficway being completed. While I haven’t yet seen specific numbers, it is reasonable to surmise that traffic on 23rd Street is not going to grow the way it used to. High traffic volumes are important to many types of retailers.
Vacancy on East 23rd Street stood at 16 percent, while the rate was 10.5 percent for West 23rd Street. Here’s a look at retail vacancy rates for other parts of town:
• Downtown: 7.5 percent
• South Iowa Street: 7.9 percent
• Sixth Street: 4.7 percent
• West Lawrence: 4.6 percent
• North Lawrence: 3.3 percent
• University district: 3.8 percent
Colliers officials, however, said interest levels are strong from retailers looking to come into town. This survey includes some vacant space that already has had deals announced to fill it, such as the former J.C. Penney store, which is being remodeled to house Hobby Lobby, Marshalls Home Goods, and Five Below. So, by next year’s report, that property won’t show up as vacant space.
But the fate of a few other big, empty spaces is still unclear. The former Hastings building at 23rd and Iowa is still empty. The Hobby Lobby building at 23rd and Ousdahl will be empty once Hobby Lobby moves to south Iowa Street. And despite an announced deal, Price Chopper is still awaiting city approval to open a grocery store in the former Borders bookstore building at Seventh and New Hampshire. How those three buildings fill up will go a long way in determining the vacancy rate for 2018.
There are also a few large spaces in downtown Lawrence, although I’m told there are several deals close to being announced. I don’t have great information on those, although I will pass along that there are certainly a couple of microbrewery projects that have been looking for space around town. In downtown, some of the large spaces looking for tenants include the former Buffalo Wild Wings location, the former Buckle clothing shop, the former Pro Print location and the ground floor of the former M&M Office supply building. What if a brewery went into that location, right across the street from The Free State Brewing Company? No one would ever get any work done in the 600 block of Massachusetts Street again.
I’ll let you know if I hear other details. In the meantime, here’s a look at some of the other vacancy rate information from the Colliers report:
• The vacancy rate for office space stood at 8.9 percent, up from 7.5 percent at the end of 2016. Lawrence’s rate is well below the peak vacancy rate that occurred in 2009, when vacancy rates were near 14 percent. Today’s rate is about equal to the Kansas City office vacancy rate, while it is less than the national average of about 12.5 percent. The report notes, however, downtown does have a 20 percent vacancy rate, as new office space has developed along the New Hampshire Street corridor.
• The industrial vacancy rate hit an all-time low in Lawrence at 1.9 percent, down just slightly from 2016 totals. The Colliers report said there are only 10 true industrial buildings available in Lawrence currently, and all of them are less than 20,000 square feet. Eight of them are less than 10,000 square feet. The industrial market has been a slow one in Lawrence. Lawrence leaders are optimistic that plans for a new industrial building in the Lawrence VenturePark will serve as a magnet for new companies. As we’ve reported, Kansas City-based VanTrust Real Estate has been awarded incentives to build a 152,000 square-foot industrial building in the park. No tenants have yet been announced, but I’m told marketing of the planned building has begun.