Retail real estate flat in first quarter

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By Tim Tresslar, Staff Writer 5:48 PM Saturday, June 5, 2010

Dayton’s retail real estate market neither lost nor gained much ground in the first quarter, according to CoStar Group, a commercial real estate data firm.

Retail vacancies hovered at around 9 percent during the quarter, essentially flat compared with fourth quarter 2009, CoStar’s report states. Between those two quarters, about 2,700 square feet of retail space became vacant in the greater Dayton market, the report stated.

The average quoted asking rate for retail space in the Dayton area have fallen about 2.65 percent during the past four quarters.

Vacancy rates for power centers — a group of freestanding large stores — fell to 6.4 percent in the first quarter, compared with 6.6 percent in the fourth quarter. Lease rates in this category slipped.

Among shopping centers, a category made up of nearly 21.4 million square feet, vacancy rates dropped during the past four quarters, the report found. Most recently, this segment saw vacancies fall from 17.6 percent in the fourth quarter to 17.4 percent in the first quarter, CoStar said.

During this period, tenants snapped up nearly 45,000 square feet of shopping center space and no new centers were added to the market, the report states.

Similarly, at least one study suggests growth of shopping centers has been meager.

In 2009, the nation had 104,919 shopping centers, according to research by CoStar that was commissioned by the International Council of Shopping Centers. As of May 5, 2010, that number had grown to 104,990, an increase of 71 centers, CoStar and ICSC said.

Michael Niemira, a vice president for the ICSC, said in a statement the slowdown in retail center construction is at the lowest level since at least 1971. He attributed the slowdown to the one-two punch of a recession and a lack of financing for projects.

He added “the prospects for the retail real estate industry appear to be improving and the sector, in time, will regain its investment luster.”

The broker who represents Kettering Tower in downtown Dayton says he remains optimistic he can fill the office space that will be left behind when C.H. Dean moves out in the fall.

“We have two prospects who have toured the space already,” said Paul Miller, vice president of brokerage services for CB Richard Ellis. CBRE is the receiver for the 30-story office tower. He did not name the prospects.

On June 3, C.H. Dean announced plans to move to Pentagon Tower, 3500 Pentagon Blvd., in Beavercreek in the fall. A company spokeswoman said C.H. Dean has 26 employees in Dayton and four in Kansas City.

C.H. Dean, which manages $625 million in client assets, has been in Kettering Tower since 1978.

Staff writer Tim Tresslar covers commercial and residential real estate for Dayton Daily News. His Real Estate Notebook appears every Sunday. He can be reached at (937) 225-7317 or via e-mail at ttresslar@coxohio.com.

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