HUNTSVILLE, Alabama — New retail stores – a Kohl’s southeast Huntsville, an “R” Superstore at Bridge Street Town Centre and an Aldi grocery store on U.S. 72 – opened their doors last year across the Huntsville area. And this year, a new Walmart-anchored center and a Target-anchored Shoppes of Madison – both on U.S. 72 – are among new retail centers being built.
But what’s happening with those older spaces around town?
Based on an analysis of the Huntsville area’s existing retail space by commercial real estate firm Graham & Co., the vacancy rate again showed improvement in 2011.
The vacancy rate ended the year at 9.87 percent, the lowest since 2007, according to Bart Smith, managing broker at Graham & Co.’s Huntsville office. The rate was 10.8 percent in 2010, 11.11 percent in 2009 and 9.12 in 2007.
Each submarket except North Huntsville made “positive strides” in its vacancy numbers, Smith said. And, though the University West submarket continues to have the highest vacancy rates, some big-box space has been leased in that area.
“Definitely, BRAC has helped, there’s no question about that,” said Don Beck, a partner with The Shopping Center Group in Huntsville. The 2005 Base Realignment and Closure round involved the move of thousands of Army, Missile Defense Agency and other federal positions to Redstone Arsenal along with the new headquarters for the Army Materiel Command and the U.S. Army Security Assistance Command.
“Retail typically follows residential growth,” said Beck, “and we’re still building houses.”
“We’re seeing more signs of a recovery,” said Michelle Jordan, the city of Huntsville’s director of economic development and legislative affairs. City officials are getting more inquiries, she said, from retail and other industry prospects.
“We’re excited about the future, but we understand there’s still work to do.”
Jordan cited the recent transformation of one University Drive retail center after a number of tenants either shut down or relocated. First, Earth Fare, Powerhouse Gym and Jo-Ann Fabrics and Crafts moved into the center across from Madison Square Mall, then Guitar Center followed, opening there last July.
“That’s a great example of backfilling at its best,” Jordan said.
A few more examples of empty spaces in the market with new tenants: Goody’s returned last year under new ownership to the former Goody’s Family Clothing space in South Huntsville Square; discount grocer Aldi opened in October in the Huntsville West shopping center at University and Sparkman drives and later an Advance Auto Parts took over an empty space in that same shopping center.
The Graham & Co. report showed that the local office and industrial sectors weren’t as tight as the retail market.
The vacancy rate in the Huntsville-area office market, which includes Madison, was 8.71 percent at the end of last year, up slightly from 8.11 percent in 2010, yet down from 9.33 percent in 2009.
Over the years, office vacancy rates have ranged from as high as 10.34 percent in 2004 and as low as 6.89 percent in 2006, according to the report.
The office market remains healthy and is still below the national average of 16.4 percent, said Smith. Much of the continued improvement in that sector, according to the report, can be attributed to the lack of new construction in the market, which grew by just over 180,000 square feet last year.
The vacancy rate for the Huntsville-area’s industrial market rose to 12.28 percent last year, up from 11.59 percent in 2010 and 9.04 percent in 2009.
The rate was 4.51 percent at the end of 2008, the report shows.
Activity for smaller industrial space was good, Smith said, though several larger blocks of space in the Jetplex Industrial Park market, including the 850,000-square-foot former Continental building, are still on the market.
“The lack of new construction should keep the vacancy rates about the same in 2012,” Smith said, “unless some growth hits the market.”
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