2017 Commercial Real Estate Market Report

Size: px

Start display at page:

Download "2017 Commercial Real Estate Market Report"

Audrey Todd
6 years ago
Views:

1 2017 Commercial Real Estate Market Report BROKERAGE DEVELOPMENT PROPERTY MANAGEMENT

market for the greater Eau Claire, Wisconsin area. The analysis includes the cities of Eau Claire and Altoona as well as the Town of Washington and the Village of Lake Hallie.

2 A message from our President: Stuart M. Schaefer President Dear Friends and Colleagues: Thank you for taking the time to review the 2017 Commercial Real Estate Market Report summarizing collected data related to the commercial real estate market for the greater Eau Claire, Wisconsin area. The analysis includes the cities of Eau Claire and Altoona as well as the Town of Washington and the Village of Lake Hallie. The data used in this report was collected during the months of November and December. The report focuses on retail, general office and industrial properties which are available for occupancy as of the end of This year s report does include industrial properties for the first time, but does not include multi-family buildings, automobile dealerships, hospitality facilities, free-standing financial institution branch offices, taverns, government-owned buildings, self-storage facilities or hospitals. We hope this report provides useful insight into the Eau Claire commercial real estate market. We relied on public records, interviews with government officials, property managers, real estate brokers and property owners as well as internal records and visual observations to create this report. We would like to thank the many people who provided the data necessary and trust that the information we received is accurate. The Eau Claire commercial real estate market is experiencing many of the same challenges as other similarly sized areas in the Midwest. This year saw a relatively steady office market, a strong industrial sector and varied retail activity. Eau Claire s strong retail presence does not appear to be at risk, but is still undergoing a changing landscape. The area s office sector had some new projects and leasing activity, but did not see any larger projects or major leasing activity for a third year. There were no new industrial projects completed and occupied in the Eau Claire area during 2017, but occupancies remained steady. The future is unclear as it relates to each market sector, but we are optimistic that the characteristics that have driven the steady growth of the Eau Claire area over the past decade are still in place along with new initiatives to improve the quality of life and make this area a desirable place to call home. Please contact us if you have questions or comments. Very truly yours, COMMONWEAL DEVELOPMENT CORPORATION About Commonweal Development: Stuart M. Schaefer President With over 35 years of trusted real estate service and development success, you can count on Commonweal to navigate through the process of commercial brokerage, development or property management on your behalf. Our full-service capabilities allow us to assist you with all of your commercial real estate needs, covering everything from feasibility analysis, site acquisition, development services, marketing, leasing, brokerage and property/asset management. We have an impressive track record of successfully completing dozens of land development, retail and office projects as well as numerous property sales throughout the Midwest. To learn more about Commonweal and our history, please visit 1

North Side/Lake Hallie West Side Downtown Oakwood Hills London

3 For the purpose of this report, we have divided the Eau Claire area into six sectors as shown on the map: East Side/Altoona North Side/Lake Hallie West Side Downtown Oakwood Hills London Road Sector lines are approximate Map - Googlemaps.com 2

Retail Analysis 2016 Rate - 7.55% VACANT SF VS. ABSORBED SF SQUARE FEET IN THOUSANDS Trade Area SF Adjustment* Total SF Vacant % Vacant East Side/ Altoona 0 637,253 101,617 15.

69% 300000 200000 100000 0 (100000) (200000) (300000) (400000) 2012 2013 201 4 2015 2016 2 017 Absorption Vacant SF 1,000,000 800,000 600,000 400,000 200,000 TOTAL SQUARE FEET VS.

4 Retail Analysis 2016 Rate % VACANT SF VS. ABSORBED SF SQUARE FEET IN THOUSANDS Trade Area SF Adjustment* Total SF Vacant % Vacant East Side/ Altoona 0 637, , % West Side (520) 773, , % North Side/ Lake Hallie 0 743,790 18, % Oakwood Hills 0 2,476, , % (100000) (200000) (300000) (400000) Absorption Vacant SF 1,000, , , , ,000 TOTAL SQUARE FEET VS. VACANCY RATE SQUARE FEET IN MILLIONS & VACANCY (%) 0 London Road (4,928) 1,106, , % Downtown 23, ,156 82, % 2017 Total 18,075 6,256, , % *Adjustments include square footage that is new, removed or reclassified % 12.00% 10.00% 8.00% 6.00% 4.00% 2.00% 0.00% Total SF Vacancy Rate VACANCY ABSORPTION TOTAL SF 3

Office Analysis 2016 Rate - 9.77% 2016 Rate - 7.55% Trade Area SF Adjustment* Total SF Vacant % Vacant East Side/ Altoona 6,167 811,595 108,578 13.38% West Side 8,943 992,049 49,335 4.

5 Office Analysis 2016 Rate % 2016 Rate % Trade Area SF Adjustment* Total SF Vacant % Vacant East Side/ Altoona 6, , , % West Side 8, ,049 49, % North Side/ Lake Hallie 0 93,248 17, % Oakwood Hills 8, ,273 28, % VACANT SF VS. ABSORPTION SQUARE FEET IN THOUSANDS 150, ,000 50,000 - (50,000) (100,000) Absorption Vacant SF 500, , , , ,000 TOTAL SQUARE FEET VS. VACANCY RATE SQUARE FEET IN MILLIONS & VACANCY (%) - London Road 7, ,744 7, % Downtown 22, , , % 2017 Total 53,503 3,593, , % *Adjustments include square footage that is new, removed or reclassified % 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% Total SF Vacancy Rate VACANCY ABSORPTION TOTAL SF 4

Industrial Analysis* 2016 Rate - 7.55% Trade Area Total SF Vacant % Vacant East Side/Altoona 526,890 22,015 4.18% West Side 4,957,743 113,525 2.29% North Side/Lake Hallie 3,844,097 50,366 1.

52% Gateway West 1,693,036 64,068 3.78% SkyPark 669,486 0 0.00% Chippewa Valley Industrial Park 2,766,635 41,806 1.51% Based on Colliers Q3 Industrial Market Outlook, total U.S. Industrial vacancy is at 5.

6 Industrial Analysis* 2016 Rate % Trade Area Total SF Vacant % Vacant East Side/Altoona 526,890 22, % West Side 4,957, , % North Side/Lake Hallie 3,844,097 50, % Downtown 1,910,390 22, % Total 11,239, , % *Industrial Parks are included in above totals Industrial Parks Gateway Northwest 1,093,755 49, % Gateway West 1,693,036 64, % SkyPark 669, % Chippewa Valley Industrial Park 2,766,635 41, % Based on Colliers Q3 Industrial Market Outlook, total U.S. Industrial vacancy is at 5.2%, down.2% from the previous quarter. In Q3, there was 222,800,000 SF of industrial space under construction in the U.S. In the Midwest, the vacancy rate for Q was holding steady at 5.2% with 53,000,000 SF under construction. To check out more statistics, go to: In Eau Claire, industrial vacancy is well below the national average at 1.85%. No substantial projects for 2018 are planned in the industrial sector, but it wouldn't be surprising to see a few projects proposed in the Eau Claire Market with the low vacancy rate and increased demand. SPECIAL THANKS TO: Banbury Place 877,094 5, % Total 7,100, , % 5

The Year in Summary: Keeping in mind that our report measures completed buildings opened and operating during the year, 2017 was a down year for the Eau Claire commercial real estate market.

Among completions, River Prairie and Oakwood Hills each saw the addition of new, smaller office buildings.

7 The Year in Summary: Keeping in mind that our report measures completed buildings opened and operating during the year, 2017 was a down year for the Eau Claire commercial real estate market. There were a handful of project completions and some leasing activity which was more than offset by several high-profile retail closures. Among completions, River Prairie and Oakwood Hills each saw the addition of new, smaller office buildings. Century21and Edward Jones now occupy the new office building completed in River Prairie while Baird Investments expanded to a new building in Oakwood Hills. Given some leasing activity, positive net absorption and minimal construction of new space the overall vacancy rate for the Eau Claire area office sector decreased from 9.97% to 8.87% during The retail sector did not fare as well as office. The closure of four Gordy s grocery stores, Gander Mountain and the Macy s department store at Oakwood Mall contributed to a rise in the retail vacancy rate from 7.55% to 12.29%. The vacancy rate and negative absorption would have been worse had Festival Foods not leased two of the Gordy s buildings and opened new stores in those locations. Despite the Festival activity, net retail absorption was a negative 200,000 square feet (SF). That change, combined with last year s net negative absorption of approximately 50,000 SF, has resulted in the second year of a rising retail vacancy rate pushing Eau Claire s rate over the national average of 12.0%. for the first time since we started conducting this analysis in The retail sectors challenges and the changing landscape of retail real estate are not unique to Eau Claire and can be seen throughout the country. We suspect many of the vacancies will need to seek adaptive reuse or complete redevelopment of the properties. Industrial space in Eau Claire had little activity, but has a generally low vacancy rate and is considered by national experts to be the most stable sector. Looking Forward: 2018 will certainly be a more robust year for commercial real estate in the Eau Claire market. In the retail sector, we project some of the big box vacancies will be repurposed with Oakwood Malls announcement that Hobby Lobby will occupy a portion of the former Macy s space and Gander Outdoors announcement that they plan to re-open the store that was previously Gander Mountain. Other notable retail activity in the Oakwood Hills area will include the opening of a 220,000 SF Mills Fleet Farm at Highway 93 and I- 94 and the addition of a HomeGoods store at Oak Pointe Plaza office activity will include Wipfli expanding to a new 51,000 SF building on Owen Ayres Court in Oakwood Hills and the addition of another small office building in River Prairie. We are not aware of any planned industrial projects, but the new 1,100,000 SF distribution center built for Mills Fleet Farm in Chippewa Falls (outside of our area of analysis) is worthy of acknowledgement. We also anticipate some noteworthy activity occurring in downtown Eau Claire during 2018 coinciding with the completion of the Confluence Arts Center. The multi-family sector continues to be active in our market and we will endeavor to add an apartment component to our report next year. 6

RETAIL MARKET ANALYSIS

RETAIL MARKET ANALYSIS KYLE BROWN RMLS Fellow, Master of Real Estate Development Candidate The retail market continues to show slow but steady improvement, but remained mostly flat during the fourth quarter.