Retail Space Update For Kansas City

portraits today studiosMost of our readers here at Kansas City Real Estate & Investing are residential investment property owners…or owners of primary homes.  But I like to keep an eye to commercial real estate as well since my wife and I also own a small business: Portraits Today Studios in Olathe, Kansas.

So when I read stories like this one from today’s Kansas City Star it catches my attention.  It’s a longer article so let me just show you the key paragraphs.

A new study by real estate researchers Reis Inc. found that shopping center vacancies rose in the third quarter to a 17-year high as unemployment climbed, consumers cut spending and stores closed. Vacancies at neighborhood and community shopping centers increased to 10.3 percent — the highest level since 1992 — compared with 8.4 percent in 2008. Vacancies at regional and super-regional malls rose to 8.6 percent from 6.6 percent a year earlier, a high for this decade.

circuit-cityRents also have dropped, to $39.18 on average at regional and super-regional malls from $40.62 a square foot a year earlier. The 3.5 percent decline is the worst year-over-year deterioration in a decade, Reis said.

“Until we see stabilization and recovery take root in both consumer spending and business spending and hiring, we do not foresee a recovery in the retail sector until late 2012 at the earliest,” Victor Calanog, Reis’ research director, said in a statement.

In my lifetime I cannot ever remember seeing so much empty space in our local shopping centers.  Trying to think back to the recessions of the late ’70s and early ’80s I just don’t think I remember as many shopping centers.  Big companies have fallen in droves and closed up shop.  True to American history, it will be the Mom & Pops that will rebuild the retail sector.  Mark my words.

For those that long to be commercial real estate investors I would have you look at today’s economy.  I think, by far, those that purchased residential rental property on proper fundamentals are weathering this storm in far better shape than the non-corporate commercial investors.

2 Comments

Filed under Commercial Real Estate

2 responses to “Retail Space Update For Kansas City

  1. Chris, I am with you. I watch foreclosure sales, not sure why and noted that a Walgreens was going under. Did a little research and it was not a WalGreens but a strip mall that they had purchased to build a Walgreens. But for a company of that size to let a property go to foreclosure . . . for $400,000 seems really bad – in Ruskin by the way.

  2. Hey, Kim. Good to hear from you.

    Walgreen’s arranges NNN leases before they make a commitment. So someone else actually owns the buildings and they lease. Never the less, the general public looks at it as a Walgreen’s problem when in fact it’s the shopping center, as you pointed out.

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