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Q3 2020 RETAIL © 2020 CBRE|Hubbell Commercial
MARKETVIEW SNAPSHOT - Q3 2020
Vacancy Up Amid Big Box Closures, Pullback in Lease Activity
Figure 2: Recent Vacancy Trend
Figure 1: YTD Leasing Activity By Sector
Figure 3: Retail Investment Sales Volume
Former Gordmans at 2590 Hubbell Ave, Des Moines. For Sale/Lease.
YTD Net Absorption (Big Box)
(272,715) SF
Vacancy Rate (Neighborhood & Community Centers)
12%
Vacancy Rate (Big Box)
6.20%
YTD Net Absorption (Neighborhood & Community Centers)
(101,678) SF
PERFORMANCE HIGHLIGHTS • Greater Des Moines retail vacancy is up 203 bps
YTD largely driven by a considerable pullback in new lease activity and big-box closures – most notably Gordmans, which added 224,000 sq.ft. of big-box availability to the market in closing all three locations.
• YTD lease activity has been sparse compared to prior periods with an approximate 44% decline in number of new deals reported year-over-year. Professional, medical and personal services continue to drive user activity accounting for approximately 40% of leases reported YTD. Stylin’ Paws signed a lease at Tuscany Village Center in Urbandale for 14,800 sq.ft. representing the largest lease of the quarter and the only deal over 10,000 sq.ft.
• The long-vacant former Toys R Us at 1211 E Army Post Rd sold to Johnson Healthcare for $1.7M, or $37 per sq. ft. The 45,000 sq.ft. building will be repurposed into an outpatient clinic for veterans and is expected to deliver in late 2021.
• Investment sales volume has been steady through the first three quarters at $41.6M. Single-tenant net-lease transactions accounted for 87% of total volume and is on pace to eclipse the previous six-year average of net-lease sale activity (See Figure 3).
MOVING FORWARDLooming closures and continued uncertainty surrounding Covid-19 will put upward pressure on vacancy levels and likely hinder any potential rent growth in the near-term. Submarkets like the CBD core that are heavily dependent on office lunch patrons will likely face the strongest headwinds moving forward as we suspect Panera Bread will not be the last of closures downtown.
While the outlook may be stark in the near-term, we are optimistic looking beyond the next 2-3 quarters. We anticipate the accelerated redevelopment of obsolete retail space paired with restored consumer confidence and pent up demand will result in an overall supply and demand correction.
21.92%
19.18%
4.11%16.44%
38.36%
Retail Trade (Non-Service)
Services - Restaurants
Services - Recreation & Entertainment
Services - Fitness, Health & Beauty
Services - Professional, Medical & Personal
8.60% 8.30%8.80%
9.60%
10.50%
12.0%
3.40% 3.10%3.80%
4.40%
6.20% 6.20%
2.50%
3.50%
4.50%
5.50%
6.50%
7.50%
8.50%
9.50%
10.50%
11.50%
12.50%
Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020
Neighborhood & Community Center Big Box
21.92%
19.18%
4.11%16.44%
38.36%
Retail Trade (Non-Service)
Services - Restaurants
Services - Recreation & Entertainment
Services - Fitness, Health & Beauty
Services - Professional, Medical & Personal
$0
$20,000,000
$40,000,000
$60,000,000
$80,000,000
$100,000,000
$120,000,000
2014 2015 2016 2017 2018 2019 2020 YTD
Single-Tenant Net Lease Strip Center Neighborhood & Community Center
Q3 2020 RETAIL © 2020 CBRE|Hubbell Commercial
MARKETVIEW GREATER DES MOINES RETAIL
Submarket Market Rentable
Area (SF) Vacant (SF) Vacancy Rate YTD Net
Absorption (SF)
Western Suburbs 2,317,196 228,514 9.9% -65,723
Northwest 71,887 23,704 33.0% -4,119
Northeast 683,474 86,755 12.7% 8,681
South 727,432 119,699 16.5% -12,340
Ankeny 442,759 50,445 11.4% -28,177
Greater Des Moines Total 4,242,748 509,117 12.0% -101,678
Suburban Neighborhood & Community Center Market Statistics
Notable Sales
Big Box Market Statistics
Neighborhood Market Rentable
Area (sf) Vacant (sf) Vacancy Rate YTD Net
Absorption
Downtown Core 158,205 57,129 36% -6,120
Court District 141,439 6,023 4% 0
East Village 246,418 28,562 12% -2,951
Western Gateway 102,593 12,686 12% 0
South of MLK 100,023 48,609 49% -13,531
CBD Total 748,678 153,009 20.44% -22,602
Downtown Retail Market Statistics
Submarket Market Rentable
Area (sf) Vacant (sf) Vacancy Rate YTD Net
Absorption
Western Suburbs 4,736,085 285,692 6.0% -87,008
CBD 59,996 0 0.0% 0
Northwest 450,270 0 0.0% 0
Northeast 1,369,811 146,694 10.7% -86,811
South 1,375,701 151,496 11.0% -112,296
Ankeny 1,396,295 0 0.0% 13,400
Greater Des Moines Total 9,388,158 583,882 6.2% -272,715
Property City Submarket Sale Price Sale Price PSF Sale Type
4900 Mills Civic Pkwy (Walgreens) West Des Moines Western Suburbs $5,700,000 $395 Investment
1211 E Army Post Rd (Former Toys R Us) Des Moines South $1,700,000 $37 Owner/User
1800 NW 86th St (Plaza 1800) Clive Western Suburbs $1,360,000 $45 Investment
Q3 2020 RETAIL © 2020 CBRE|Hubbell Commercial
MARKETVIEW GREATER DES MOINES RETAIL
YEAR DES MOINES MSA Year - Over - Year
2013 $8,411,526,797 1.71%2014 $8,787,650,388 4.47%2015 $9,346,317,273 6.36%2016 $9,769,581,274 4.53%2017 $10,071,879,055 3.09%2018 $10,128,863,313 0.60%2019 $10,382,430,906 2.50%
Source: Iowa Retail and Use Tax Report, Iowa Department of Revenue and Finance
Annual Retail Sales LARGEST EMPLOYERS EMPLOYEES
Wells Fargo & Company 14,500UnityPoint Health - Des Moines 8,026Principal 6,500Hy-vee 6,400Nationwide 4,525Mercy Medical Center 4,228John Deere 3,089Vermeer Corporation 2,500Corteva 2,495JBS USA 2,300Pella Corporation 2,224Wellmark Blue Cross Blue Shield of Iowa 2,000UPS 1,600Bridgestone Americas Tire Operations 1,600Mercer 1,560YMCA 1,300EMC Insurance Companies 1,269Casey's 1,200Tyson Fresh Meats, Inc. 1,200
Population644,590 (2018 MSA)
Sources: Greater Des Moines Partnership Bureau of Economic AnalysisUS Bureau of Labor Statistics - December 2018
GREATER DES MOINES ECONOMIC DATA
Mining, logging, and construction Manufacturing Trade, transportation, and utilities Information
Construction, 6%
Manufacturing, 5%
Transportation, 19%
Information, 3%
Financial Activities, 16%Professional and
Business Services, 13%
Education and Health Services, 14%
Leisure and Hospitality, 9%
Other Services, 3%
Government, 12%
Unemployment Rate8.0%
Sources: US Bureau of Labor Statistics
MARKETVIEW GREATER DES MOINES RETAIL
2020 - Hubbell Commercial Brokers, L.C., d/b/a CBRE|Hubbell Commercial. The information contained herein has been obtained from sources believed reliable. While we do not doubt its accuracy, we make no guarantee, warranty or representation, either expressed or implied, as to its accuracy or completeness.
SUBMARKET BOUNDARIES
Central Business District (CBD) - Includes the Western CBD and the East Village, extending west to Martin Luther King Jr. Parkway and east to East 14th Street.
Western Suburbs - Encompasses West Des Moines, Clive, Urbandale, Windsor Heights, Johnston, Grimes, Waukee, and some unincorporated areas of Polk, Dallas, and Warren Counties.
Northwest - Includes Northwest Des Moines and Western Saylor Township.
Northeast - Consists of Northeast Des Moines (extended south to the Des Moines River), Pleasant Hill, Altoona, Eastern Saylor Township, and Delaware Township.
South - Comprises Southwest Des Moines, Southeast Des Moines (south of Des Moines River), and some unincorporated areas of Polk and Warren Counties.
Ankeny - Evaluated separately.
DES MOINES CENTRAL BUSINESS DISTRICT (CBD)
GraysLake
Des MoinesRiver
RacoonRiver
SaylorvilleLake
ANKENYREGIONALAIRPORT
DES MOINESINTERNATIONAL
AIRPORT
NW 10
0TH S
T
ANKE
NY B
LVD
E EUCLID AVE
STATE
ST
SE 14
TH ST
BROADWAY AVE
DELA
WARE
AVE
HUBB
ELL A
VE
NE 78TH AVE
DELA
WARE
AVE
SW 9T
H ST
2ND
AVE
E UNIVERSITY AVE
SW 63
RD ST
86TH
ST
NW 70TH AVE
GRAND AVE
ARMY POST RD
MERL
E HAY
RD
100T
H ST
EP TRUE PKWY
DOUGLAS AVE.
63RD
ST
RAILROAD AVE
INGERSOLL AVE
NW 86
TH ST
RACCOON RIVER DR
ML KING JR PKWY
JORD
AN CR
EEK PK
WY
MILLS CIVIC PKWY
FLEUR
DR
NW 14
2ND S
T
GRAND AVE
N 1ST
ST
HICKMAN RD
UNIVERSITY AVE
NW BEAVER DR
NW 12
8TH S
T
SW 8TH ST
163
R22
28
5
415
5
141
65
65
65
5
28
69
6
28
5
6
44
65
69
6
6569
28
80 35
35
235
35
80
235
80
80
35
CARLISLE
NORWALKCUMMING
URBANDALE
DES MOINES
CLIVE
WESTDES MOINES
WARRENCOUNTY
MADISONCOUNTY
WAUKEE
JOHNSTONGRIMES
BONDURANT
ALTOONA
PLEASANTHILL
ANKENY
POLKCOUNTY
DALLASCOUNTY
WINDSORHEIGHTS
CBD
SOUTH
NENW
WESTSUBURBS
DES MOINES METROPOLITAN AREA
GRAND AVE
GRAND AVE
GRAND AVE
GRAND AVE
E GRAND AVE
9 TH ST
WALNUT ST
WALNUT ST
W
ALNUT ST
E WALNUT ST
3RD ST 3RD
ST 3RD ST SW
3RD ST SW
2ND
ST IND
IAN
OLA
AVE
2ND
AVE 2ND
AVE 2N
D AVE
6TH AV
E 6TH AV
E 6TH AVE
7TH ST 7TH
ST 7TH ST 7TH
ST SW 7TH
ST
SCOTT AVE
SCOTT AVE
E ST
H S
T
SE
6TH
ST
E 6T
H S
T
PEN
NSY
LVA
NIA
AVE
E
7TH
ST
SE 7TH ST SE 7TH
ST
E 14 TH ST
SE 14TH ST E 14TH
ST
KEOSAUQUA WAY 8TH ST 8TH
ST
W MARTIN LUTHER KING JR PKWY W MARTIN LUTHER KING JR PKWY
W MARTIN LUTHER KING JR PKWY
MA
RTIN LU
THER JR PKW
Y MA
RTIN LU
THER KIN
G JR PKW
Y FLEUR D
RIVE
LOCUST ST
LO
CUST ST
L
OCUST ST
LO
CUST ST
18TH
ST
COURT AVE
COURT AVE
E COURT AVE
5TH AV
E 5TH AVE 5TH
AVE SW 5TH
AVE
DES MOINES ST
DES MOINES ST
LYON ST
E 12TH ST E 12TH
ST
E 5TH ST
E ELM ST
E 2ND
ST
E VINE ST
E 5TH ST
PARK ST
9TH ST
CENTER ST
13TH AVE
M
ULBERRY ST
4TH ST
E 1ST ST
CHERRY ST
E LIVINGSTON AVE
SCHOOL ST OAKRIDGE DR CROCKER ST
17TH ST 17TH
ST 17TH ST
INGERSOLL AVE INGERSOLL AVE
HIGH ST
HIGH ST HIGH ST
CENTER ST
12TH ST
CENTER ST 10TH ST
12TH ST 12TH
ST
TUTTLE ST
4TH ST
WATSON POWELL JR WAY
COTTAGE GROVE AVE COTTAGE GROVE AVE CROCKER ST 15TH ST 15TH ST 15TH
ST SW 16TH
ST
20TH ST
WOODLAND AVE WOODLAND AVE
E 9TH ST E 9TH
ST
MA
PLE
ST
E 4TH ST E 4TH
ST E 4TH ST
ROBE
RT D
RAY
DR
SW W
ATER ST
SW W
ATER ST
19TH ST 19TH
ST
SE 14TH ST
TUTTLE ST
MURPHY ST
OAKRIDGE AVE
15TH ST
16TH ST
18TH ST
16 TH ST
LINDEN ST
11TH ST
SCHOOL ST 8TH ST
SE 10TH ST
SE 9TH ST
RACCOON ST
SE 8TH ST
E 3RD ST
E MARKET ST
VINE ST
MARKET ST
W R
IVER
DR
E 13TH
E 13TH
PLEASANT ST
SCHOOL ST
SCHOOL ST LYON ST
LYON ST
Racoon River
Des Moines River
Des Moines River
ELM ST
235
State Capitol
PrincipalPark
Iowa EventsCenter
BotanicalCenter
East Village
Western Gateway Park
801 Grand Civic
Center
State Historical
Museum
Court AvenueDistrict
While there are a variety of retail uses, this survey focuses on regional shopping malls, neighborhood and community centers, and big box retail. �e neighborhood and community centers analysis focuses on multi-tenant with small to medium size occupiers. Big box includes grocery stores, home improvement stores, and larger retail and discount stores containing approximately 20,000 SF or more in size. �e 2019 Marketview Snapshot contains information collected.
METHODOLOGY
Sources: CoStar Group, Polk County Assessor and Dallas County Assessor