KC metro retail space is way overbuilt and despite a negative net absorption so far this year a significant 1.5M sqft of retail space is under construction in the burbs. I checked Denver and they also have slight negative net absorption and also have a lot of retail construction, not quite as high as KC. KC has nearly 65M sqft of rentable retail space compared to 82M in Denver, meaning KC has more retail space than Denver per capita.
Seems to be the case. Interesting to see East KC burbs still where the retail growth is hot.
edit: If you compare to Q1/2017 in first post metro space is actually shrinking a bit so 'construction' might be more about churn of old to new spaces, like an old KMart/Sears spot turning into something else - in addition to sprawl in KC's case.
We might be seeing just the scratch of surface with impact of online shopping. Overall retail sqft shrinking, churn of old spaces into 'experiences' (like doubling down on bars/restaurants) and fewer traditional stores.
Also note that Downtown average $/sqft is now higher than S JoCo compared to Q1/2017. And Plaza jumped from $20 to $30.
The upside to rising retail rents downtown with lowest vacancy in metro is that it may encourage more developers to include a retail element to their projects.
Costco, Target and Trader Joe's are surviving the online onslaught. Downtown should strongly pursue an urban Target and TJ's. Plaza should pursue more experiences like jazz clubs and upscale nightlife.
About half of Cosentino's is prepared foods with a real meat/seafood counter (that will take special orders), TJ's doesn't do prepared foods or fresh meats. And TJ's doesn't carry common brands or broad range of items. TJ's is a true niche specialty store, C's is a broader services store. I think they'd complement each other. Is like asking if an extra bar/restaurant would hurt others. A Whole Foods might hurt them a bit, which is being tested now in Brookside with new WF nearby.
Cosentino's is wonderful for what it is, but they are in need of some more serious competition to keep things current. It is a nice store, but I feel like they have changed very little in 10 years. They aren't enough of any one thing to make them a destination, and I think that's partially why many people in the area still go to Whole Foods or Price Chopper. The meat and seafood situation has been meh for a while, and they have had the same exact food in the prepared section for 10+ years. I could be wrong, but I don't think their organic produce selection is very good. TJ's coming in as a more affordable and niche offering might make Cosentino's focus more on some things they can definitely separate themselves with.
Downtown vacancy improved from Q2 but apparently lost some retail space as well.
Plaza vacancy improved but there have been several closures announced since report.
East part of metro continues to build significant retail space.
Can compare to Q2 report several posts back.
According to JLL, % breakdown of retail bankruptcies for US...
Long before COVID-19, the retail sector was transforming. Shifts in demographics, evolving consumer preferences, the erosion of the mid-market buyer and highly leveraged retailers created an environment with little margin for error and an increasing probability of closures or bankruptcies. In 2019, before the word “pandemic” was commonly used, retailers closed 9,300 stores. That represented a 60 percent increase from the 5,800 stores closed in 2018. As perhaps another 15,000 permanent store closures are recorded in 2020, consumers are speaking through their purchases. Their message is that convenience and safety are among their top priorities.
KC has been coping with pandemic better than most markets in most categories but according to Cushman is not recovering from traditional retail as quickly (while KC onlne warehousing is booming). KC's retail vacancy (8.5%) is higher than US avg (7.3%) and peer cities. KC still had some negative absorption in Q1 while many major markets had positive absorption.
Newmark Zimmer Q3 KC retail report. Urban Core continues with among best/lowest vacancy with positive absorption last Q, but also relatively low retail space...
There's some buzz about how hot retail has come back but the data is misleading.
There are various sources that generally agree that absorption has come back and has offset losses since pandemic started. Vacancies also at a decent 5-7%.
Looks great but various sources also agree that the overall inventory has shrunk over the years mostly due to online competition and change in consumer habits. That is new construction is not replacing older retail that shutters or converts to something else.
I wouldn't trust those exact values as methodologies may have changed but the trend is likely directionally correct and likely a fairly significant reduction depending on market. The industry reports don't directly point this out because, of course, most generally promote the industry.
Last edited by earthling on Fri Jul 15, 2022 1:37 pm, edited 4 times in total.
earthling wrote: ↑Fri Jul 15, 2022 7:54 am
There's some buzz about how hot retail has come back but the data is misleading.
There are various sources that generally agree that absorption has come back and has offset losses since pandemic started. Vacancies also at a decent 5-7%.
Looks great but various sources also agree that the overall inventory has shrunk over the years mostly due to online competition and change in consumer habits. That is new construction is not replacing older retail that shutters or converts to something else.
I wouldn't trust those exact values but the trend is likely directionally correct and likely a fairly significant reduction depending on market. The industry reports don't directly point this out because, of course, most generally promote the industry.
Is there any sort of breakdown for national/international scale retail vs local/regional? I could see national trending down while small business is growing, at least that’s my anecdotal experience.
I suspect it's probably that Cushman reduced the space they track finding it not worth tracking older spaces, and that's also an indicator of the industry confidence. Cushman still shows year over year drops in inventory even factoring that. Newmark is showing hot/functional markets growing space recently (including KC) but not the stagnant markets - they track all types. And the big shift going on recently may mean hot areas aren't growing space at a faster pace than stagnant areas shuttering/repurposing some retail space.
We (PE investment group) don't engage much in retail anymore so I don't see feasibility studies to get better idea like we do with other CRE sectors.
Last edited by earthling on Sat Jul 16, 2022 6:00 pm, edited 1 time in total.