KNOXVILLE RETAIL SNAP SHOT

This morning Cushman & Wakefield | Cornerstone is releasing the third quarter results of the Knoxville retail market.  Its an interesting look at changes that have been made in the market in the last few months.  

RETAIL SNAPSHOT - KNOXVILLE, TN 3Q 2012  

The outlook for today’s retailers remains challenging as many find themselves confronted by reduced consumer spending and weak credit market conditions. New economic realities have resulted in a new order of buyers who are more price-conscious and careful about the discretionary purchases they make. The critical challenge for retailers under these circumstances will be delivering a compelling in-store experience that drives profitable growth in 2013. The one-size-fits-all approach doesn’t work for all shoppers – nor all locations. To grow, many retailers are shrinking, sometimes with smaller stores, sometimes by introducing smaller, more intimate and approachable locations within larger stores. 

RETAIL MARKET OVERVIEW    

The vacancy rate closed the quarter at 6.1%. Net absorption stands at a negative 348,579 square feet (sf). Rental rates increased slightly from the second quarter 2012 levels, ending at $11.31 per square foot (psf).

This summer, a South Carolina developer paid $1.7 million for a 4.4- acre site next to the Wal-Mart on Norris Freeway, and said it planned to develop a retail center for 10 tenants. Hibbett Sports recently announced that it will open a store at the site.

There were several significant lease transactions for the quarter including an 18,360-sf lease at 1665 E. Andrew Johnson Hwy. to Badcock Furniture (seller-represented by Cushman & Wakefield|Cornerstone). Also of note is the lease at 1115 N. Charles G. Seivers Blvd to United Grocery for 18,225 sf.

Several significant sales took place over Q3 12, including the closing of 640 Plaza (44,435 sf) for $5.2 million. Also, Goodwill Industries recently closed on a 45,178-sf neighborhood center in the North/Broadway submarket for $2.5 million. 

“The consumer hasn’t exactly thrown in the towel, which is encouraging because they’ve been battered and bruised in recent

months with very slow job growth,” said Millan Mulraine, senior U.S. strategist at TD Securities Inc. in New York. “We’re off to good a start in the third quarter. I do question the sustainability of the current level of spending. It can only be sustained if employment growth continues to accelerate.” 

OUTLOOK

“We have seen a major upswing in the Knoxville and east Tennessee retail market. With the new developments happening in West Knoxville, Oak Ridge, Halls and the growth at Emory Road, we feel very positive about new east Tennessee retail. National tenants are expanding into areas that had been previously underdeveloped and new anchors are moving into the area developments.”

-John Rebori, CCIM, Associate Director, Cushman & Wakefield | Cornerstone

If you want to see the entire report and stats please click on the link below.  

http://library.constantcontact.com/download/get/file/1104796466421-635/Knoxville_AMERICAS_MarketBeat_Retail_2page_Q32012.pdf 

Good news for Knoxville and Interesting Office Developments

Its one of those good news, bad news things...

Good: Knoxville will be home  to the strongest job market in the country this spring, according to a national survey released by Manpower Inc.  Twenty-five percent of the Knoxville employers surveyed said they would add jobs in the April through June period.

Manpower surveyed more than 18,000 employers in the 100 largest metro markets.

Bad:  Tenants are squeezing employees in tighter than ever before. 

According to the Wall Street Journal, the "Corporate Cram" is single-handedly putting a hiccup in the office recovery.

Companies looking for cost savings are increasingly packing more employees into less space, a trend that is helping cause U.S. vacancy rates to linger at high levels even as employers add jobs in the slowly expanding economy.

Panasonic Corp., for example, is planning to move into a new 280,000-square-foot U.S. headquarters in Newark, N.J., next year. But it is taking significantly less than the approximately 575,000 square feet of office and labs at its current campus in Secaucus, N.J.  The electronics company says it isn't reducing its head count, but is simply reconfiguring its offices.

Employers gradually have been taking up less space for decades, but real-estate professionals say the drive to use less space has picked up since the economic downturn, as companies look to trim costs where they can across their budgets. 

Workstations are shrinking and private offices are disappearing, replaced by cubicles with low walls, and more employees are working remotely.  Companies today are taking space with an average of about 200 square feet per employee, down about 20% from a decade ago.  

Office landlords have been encouraged lately by news of job growth. They also are hoping that the dearth of new construction will give the market a boost.To be sure, not all companies are overhauling their space. Many tenants simply renew their leases when they come due, which makes it harder to rethink their approach to workspace than if they were moving to a different building.

But some industries are both contracting and using less space per employee. For example, many companies in the financial-services sector—a traditional driver of the office-space market—have been laying off workers and looking for more-efficient workspace.

Just when you think things are getting better...