Real Estate Market Studies

Industrial Real Estate Outlook

RAW DJI_0017Market Overview

The Southwest Missouri Industrial market recorded a negative 557,623 square feet (sf) of overall absorption during 2Q 2017. Direct absorption totaled negative 284,112 sf. The total vacancy rate increased from 4.2% in 2Q 2016 to 5.4% at the close of 2Q 2017. Direct vacancy rates increased 0.5 percentage points from 4.1% to 4.6% during the same period. Weighted average rent growth continued to improve during 2Q 2017 in the CBD, SW Springfield and Ozark markets. However, weighted average asking rents in all classes declined slightly during 2Q 2017 recording $4.26 per square foot (psf) compared to $4.28 psf at the close of 2Q 2016.

Market Highlights

The negative absorption reported in 2Q 2017 can be attributed to the downsizing/exit of two major tenants in the NE Springfield market. Reckitt Benckiser, LLC vacated 448,731 sf (264,000 sf of sublet space) at two buildings. They moved a major portion of their business to the St Louis area. Watts Radiant vacated 142,350 sf and moved their business to North Carolina and Mexico. The overall market experienced net gains in occupancy during the quarter with the new deliver of Everything Kitchens (48,600 sf) building coming online and with the sale of two large buildings, one purchased by HH Investments & Leasing (36,213 sf) and the other by Coryel Enterprises (18,332 sf). Currently, 464,140 sf is under construction in the industrial development pipeline with the largest observed is the expansion of 200,000 sf at Springfield Underground. The remaining buildings belong to single tenant users including: Mercy Surgical Pack, Vital Farms Processing and Prime Plaza and Driving Training Center.

For a full report on the health of the industrial real estate market in this area, download the complete Industrial Report here.

Office Real Estate Outlook

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Market Overview

The Southwest Missouri office market recorded a positive 66,993 square feet (sf) of overall absorption during 2Q 2017. Direct absorption totaled the same. The total vacancy rate decreased from 8.1% in 2Q 2016 to 6.8% at the close of 2Q 2017. Direct vacancy rates decreased 1.2 percentage points from 7.9% to 6.7% during the same time period. Weighted average rent growth continued to improve during 2Q 2017 in Class A properties in the CBD and SE Springfield markets. Weighted average asking rents in all classes increased 6.2% recording $15.48 per square foot (psf) at the close of 2Q 2017 compared to 2Q 2016. Class A weighted average rents decreased 2.7% year-over-year, recording $18.55 psf at the close of 2Q 2017.

Market Highlights

SE Springfield market produced the largest amount of activity, due to a 11,217 sf building at 1517 E Bradford Parkway being purchased by Waco Title Co and ATA Martial Arts leasing a 7,000 sf space at 1240 E Independence Street. Currently, there is 330,336 sf of under construction space. The O’Reillys addition of 103,000 sf is the largest single tenant building and  the Farmers Park Building #5 with 58,000 sf is the largest multi-tenant building.

For a full report on the health of the office real estate market in this area, download the complete Office Report here.

Retail

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Market Overview

The Southwest Missouri retail market recorded a negative 48,789 square feet (sf) of overall absorption during 2Q 2017. Direct absorption ended the same. The total vacancy rate increased from 5.0% in 2Q 2016 to 5.5% at the close of 2Q 2017. Direct vacancy rates increased the same. Weighted average asking rents in all uses increased 0.6% recording $11.32 per square foot (psf) at the close of 2Q 2017 compared to 2Q 2016. Weighted average rates increased by 6.4% in Neighborhood/Community Centers year-over-year, recording $14.67 psf at the close of 2Q 2017.

Market Highlights

The negative absorption reported in Southwest Missouri at the close of 2Q 2017 can be attributed to Kmart vacating 122,306 sf at the Springfield Shopping Center. Sears, the parent company of Kmart, announced in January that it would shut down 150 stores. The overall market experienced positive gains during the quarter with Sutherland Lumber & Home Center leasing 17,850 sf at Glen Isle Center and Tuesday Morning leasing 13,000 sf at Brentwood Center South. Currently, 315,035 sf is under construction in the retail pipeline with the largest being Springfield Plaza Shopping Center (150,000 sf) followed by Glenstone Marketplace (100,000 sf).

For a full report on the health of the retail real estate market in this area, download the complete Retail Report here.