There are signs of stability, if not actual improvement, in the Louisville community-neighborhood shopping center market. Vacancy is unchanged from the first quarter, at 10.7%, and down 20 basis points year-over-year. First Glance data indicate a third quarter rate of 10.5%, a small but welcome drop in the rate. The 38,000-square-foot Park Duvalle neighborhood shopping center remains the only completion so far this year. The 150,000-square-foot Bardstown Road Development community center remains under construction, along with the Shelbyville Road neighborhood center (31,000 square feet) and Wesley Commons neighborhood center (34,000 square feet). Shelbyville is due online in March 2014. There are 10 projects totaling 2.1-million square feet, ranging from community-neighborhood to power centers, in the planning stage, but none with completion dates. Reis predicts the community-neighborhood center vacancy rate will end 2012 at 10.6%, and remain in that range through 2014.
Both the average asking rent and the average effective rent fell 0.1% in the first quarter of 2012. Second quarter rents were essentially flat at $15.59 psf asking and $13.68 psf effective (up one cent). Effective rents increased three cents year-over year. First Glance data from Reis indicate a third quarter asking rent of $15.67 psf. This market is not improving, but is not falling behind. Annual rent gains of less than 1.0% are not uncommon here, as are rent losses. No serious rental gains are forecast in 2012. Not until 2015 does Reis forecast a year in which both rental measures post gains over 2.0%. Stronger gains are estimated for the outlying years of the Reis forecast.
Cushman & Wakefield reports “Louisville’s retail market continues to slowly heal and expand even in the midst of the economic downturn. The regional mall sector continues to maintain 93.0% occupancy,” this source notes. “In-line space has firmed up and rents have begun to rise again in popular in-fill locations such as Bardstown Road and Shelbyville Road.”