Retail Report 4Q 2012

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MARKET

Prepared by: Dan Dutton

Associate Vice President

2012 Summary

REPORT

Retail


By: Dan Dutton, World Group Commercial Real EstateCity Wide HighlightsA Few Notes this Coming Year...

The retail real estate market in the Omaha area expe-rienced its best year since the downturn began. So that we have something to compare, let’s take a quick look back. In 2011, we saw a net absorption of 140,701 square feet. At the end of 2011 the vacancy rate was 11.2%. Activity was healthy in the retail market in 2011 but it was nothing like we experienced in 2012.

In 2012, the metro area positively absorbed 574,665 square feet, and the vacancy rate dropped to 9.6%. This can be attributed to a couple of reasons. Devel-opment activity in the retail market is still a minimum with no major projects coming on-line in 2012. Retail-ers and restaurants expanded at a faster pace than any other time since the recession.

Demand for Class A real estate continues to be very high with several new restaurants entering the market such as Firehouse Subs, Jersey Mike’s Subs, Raising Cane’s, Dunkin Donuts and a few to be named in 2013. Several restaurants already located in the metro are actively seeking additional locations.

2012 brought the announcement of the first major retail development in Omaha for several years. Set-tler’s Creek truly got off the ground with Hobby Lobby signing a lease for a building to be built at 72nd & Corn-

Source: XceligentMarket Research

Lease Rate Low

Lease Rate High

Avg. Lease Rate

Council Bluffs $9.00 $14.00 $11.44

East $4.00 $19.00 $11.75

North Central $5.00 $16.00 $11.32

Northwest $8.50 $20.00 $13.62

Sarpy West $2.50 $19.50 $11.59

South Central $5.00 $28.00 $11.70

Southwest $1.87 $25.00 $13.05

West Dodge Corridor $7.50 $20.00 $11.91

Sarpy East / Bellevue $4.77 $22.00 $10.86

GRAND TOTAL $1.87 $28.00 $12.33

Lease Rate by Type (Q4 2012)

100,914

45,545

168,974

138,541

110,938

19,991

(10,238)

100,000

120,000

140,000

160,000

180,000

80,000

Free-standing

Conv/Strip Center

Big BoxNeighborhood Center

Regional Center

CommunityCenter

Power Center

60,000

40,000

20,000

0

(20,000)

Net

Abs

orpt

ion

(SF)

YTD Total Net Absorption (SF)

husker Road. Another major retailer has a lot under contract at Settlers Creek.

Big box spaces were active in 2012. Big Lots signed a lease and opened a store on 72nd Street. The most exciting big box retailer to sign a lease this year was HomeGoods, which opened its first store in Nebraska at Montclair-on-Center located at 132nd & West Center. It’s not often that a new retailer to the market can generate lines of 200 people deep on the morning it opens.


West Dodge Corridor


In 2012 the West Dodge Corridor experienced a slight uptick in the vacancy rate from 4.8% in 2011 to 5.2% in 2012. There was a net negative absorption rate of 14,175 square feet. The West Dodge Corridor is the smallest submarket covered in the report, so a small

10.0%

8.0%

6.0%

4.0%

2.0%

0.0%

Vaca

ncy

Rate

(%)

Vacancy Rate by Type (Q4 2012)

11,1319.5%

(10,680)

9.7%

7,636

1.0%

10,000

15,000

5,000

0

5,000

Conv/StripCenter

Conv/Strip Center

NeighborhoodCenter

RegionalCenter

NeighborhoodCenter

Regional Center

10,000

15,000

Net

Abs

orpt

ion

(SF)

YTD Net Absorption by Type (SF)

amount of activity can swing the numbers. This sub-market continues to be the strongest in Omaha and we suspect that will continue in 2013.

By: Dan Dutton, World Group Commercial Real Estate

By: Dan Dutton, World Group Commercial Real EstateSouth Central


The South Central submarket had a very strong year in 2012 with a net positive absorption of 131,955 square feet and a decrease in the vacancy rate to 7.8%. Big Lots opened a new store on 72nd Street, the former Borders building sold for a still undetermined use and the Best Buy building was sold to the owner of Cross-

roads. We also saw the announcement of Charles-ton’s going into the former Old Country Buffet at 76th & Dodge. Crossroads continues to be the subject of redevelopment, although we don’t foresee any an-nouncements on that in 2013.

13,000

(25,556)

52,149

92,362

20,000

40,000

60,000

80,000

100,000

0

20,000

40,000Conv/Strip

CenterNeighbor-

hoodCenter

Community Center

Free-standing

Net

Abs

orpt

ion

(SF)


25.0%

30.0%

20.0%

15.0%

10.0%

5.0%

0.0%

Vaca

ncy

Rate

(%)


3.4%

19.1%

7.1%

3.6%

24.8%

Free-standnig

Conv/Strip

Center

Neighbor-hood

Center

Community Center

Regional Center


Southwest



The Southwest submarket had the strongest year of any submarket in 2012. The submarket experienced a net positive absorption of 229,939 square feet and a decrease in vacancy rate to 8.2%. Montclair-on-Center at 132nd & West Center added a 25,000 square foot HomeGoods store. Baker’s Square added an Alegent Health clinic. L Street Marketplace saw the addition of Mattress People and Kirkland’s, but also the closing of Best Buy. A mattress store filled the former Blockbuster on 177th & West Center. This submarket promises many more announcements in 2013, including new restau-rants and retailers.


0.0%

40,000

2.0%

20,000

4.0%

0

6.0%

20,000

8.0%

40,000

10.0%

60,000

12.0%

80,000

14.0%

100,000

Vaca

ncy

Rate

(%

)

Freestanding

Freestanding

Conv/Strip Center

Conv/StripCenter

Neighborhood Center

Neighborhood Center

Community Center

CommunityCenter

Big Box

Big Box

RegionalCenter

Power Center

Power Center

8.6%

59,789

12.6%

13,874

10.7%

43,969

10.2%

37,347

3.8%

85,198

3.7%

5.6%

(10,238)

Net

Abs

orpt

ion

(SF)




Sarpy WestThis submarket continued to show growth in 2012. There was a net positive absorption of 49,808 square feet and a vacancy rate of 12.8%. This area saw one of the first new developments announced in the entire metro since the downturn began. Settler’s Creek at

50.0%

60.0%

40.0%

30.0%

20.0%

10.0%

0.0%

Vaca

ncy

Rate

(%)


23,725

11.9%

21,537

13.8%

(10,269)

(526)

15,341

59.1%

3.8%

20,000

30,000

40,000

10,000

0

10,000

Free-standing

Neighbor-hood

Center

Conv/Strip

Center

Community Center

Conv/Strip

Center

Community Center

Regional Center

Neighbor-hood

Center

RegionalCenter

20,000

Net

Abs

orpt

ion

(SF)


72nd & Cornhusker was announced with the signing of Hobby Lobby. We expect another major announce-ment for this development in 2013. We also expect to see more construction at Market Pointe located at 72nd & Giles in 2013.



Sarpy East/Bellevue


10.0%

12.0%

14.0%

16.0%

8.0%

6.0%

4.0%

2.0%

0.0%

Vaca

ncy

Rate

(%)


12,579

14.2%

(3,502)

8.7%

(6,600)

2.7%

10,000

15,000

20,000

30,000

40,000

5,000

0

5,000

Conv/Strip Center

Conv/Strip Center

Community Center

NeighbohoodCenter

NeighborhoodCenter

Community Center

10,000

Net

Abs

orpt

ion

(SF)



This submarket saw little change in 2012 with a net positive absorption of 2,477 square feet and low vacancy rate of 6%. The centers in this market have stayed strong with little vacancy and there also has

been very little new retail construction. One deal that took place in 2012 was Godfather’s signing a lease for the former Smashburger at Twin Creek.


East

50.0%

60.0%

40.0%

30.0%

20.0%

10.0%

0.0%

Vaca

ncy

Rate

(%)


4,8646.5%

57,312

6.2%

13.7%

33.6%

60,000

50,000

40,000

30,000

Conv/StripCenter

NeighborhoodCenter

Conv/Strip Center

Neighbor-hood

Center

Community Center

Big Box

20,000

10,000

0

Net

Abs

orpt

ion

(SF)


This submarket had a strong year bringing the va-cancy rate down from 17% in 2011 to 10% at the end of 2012. The net positive absorption for this submarket



was 63,776 square feet. This speaks loudly about the turnaround in the retail market with new tenants looking to add locations or new businesses.

This submarket was the hardest hit in 2012 with a negative absorption of 45,351 square feet. Although the vacancy rate for this market is still strong at 5.8%.

North Central


2,806

(9,493)

(35,678)

(2,986)

30,000

40,000

20,000

10,000

0

Community Center

Regional Center

Conv/Strip Center

Neighbor-hood

Center

10,000

20,000

30,000

40,000

Net

Abs

orpt

ion

(SF)


30.0%

20.0%

10.0%

0.0%Vaca

ncy

Rate

(%)


11.6%

5.7% 3.1%

11.8%

Community Center

Conv/Strip Center

Regional Center

Neighbor-hood

Center


Landlords will remain aggressive in this area looking for deals. There should be a small uptick in 2013 with more tenants leasing space.


Northwest


20,822

46,638

10,049

25,740

40,000

50,000

60,000

30,000

20,000

10,000

Community Center

Conv/Strip Center

Big BoxNeighbor-hood

Center

0

Net

Abs

orpt

ion

(SF)


25.0%

30.0%

20.0%

15.0%

10.0%

5.0%

0.0%

Vaca

ncy

Rate

(%)


15.2%

10.0%

1.5%

Community Center

Conv/Strip Center

NeighborhoodCenter

This submarket had a very strong year keeping its vacancy rate low at 6.1% with a net positive absorption of 103,249 square feet. Walmart closed on the former Borders store at 132nd & West Maple. That building has


been torn down and construction is ongoing for a Walmart Neighborhood Market. Expect to see more announcements in 2013 and probably a new retailer and restaurant or two for the area.

Council Bluffs


4,400 5,7501,250

41,58740,000

50,000

60,000

30,000

20,000

10,000

Conv/Strip Center

Neighbor-hood

Center

CommunityCenter

Freestanding0,000

Net

Abs

orpt

ion

(SF)


50.0%

60.0%

40.0%

30.0%

20.0%

10.0%

0.0%

Vaca

ncy

Rate

(%)


0.3%5.5%

11.5%

1.9%

57.8%

Conv/Strip

Center

Comm-unity

Center

Neighbor-hood

Center

Regional Center

Free-standing

Council Bluffs did see a net positive absorption for 2012 of 52,987 square feet. The market continues to struggle with a vacancy rate of 16.1%. The Mall of the Bluffs has been put up for sale and it will be interesting to see what the future holds for that property. There should be more positive growth in 2013, although

landlords will need to continue to be aggressive and tenants should expect to see good deals. There is a chance that there will be a major announcement before the end of the year, but we will have to wait and see.


Inventory - The total square feet of all single and multi tenant retail properties greater than 5,000 square feet.

Total Available Square Feet - All of the available leas-able space within a building, whether it is occupied or vacant, for direct lease or sublease space. Space can be available but not vacant, for example, if the landlord, or his agent, is marketing space that will be coming available at a future date because a tenant is planning to move.

Total Vacant Square Feet - The total of all of the vacant square footage within a building, including both direct and sublease space.

Direct Vacant Square Feet - The total of the vacant square footage in a building that is being marketed by an agent representing the landlord.

Sublease Square Feet - Space that is offered for lease by a current tenant, or his agent, within a property.

Omaha - Market Area Map

Terminology


Report Prepared by Dan DuttonWorld GroupCommercial Real EstateAssociate Vice President780 North 114th StreetOmaha, NE [email protected]

Dan Dutton is a member of the retail advisory board for Xceligent. This report proudly uses market information from Xceligent considered by most real estate professionals in Omaha to be the most accurate market information.

Whether the tenant is paying rent or not, the space is considered vacant only if it is unoccupied.

Net Absorption - The net change in occupancy from quarter to quarter, expressed in square feet.

Retail Report 4Q 2012

Documents

retail market

street omaha

retail real estate market

vacancy rate

major retail development

major retailer

omaha area expe

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