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TRADING SPACES: Ross Murray sees more food and entertainment-based activity in retail sites. Three eatery tenants are coming to this Battlefield Road retail center.
TRADING SPACES: Ross Murray sees more food and entertainment-based activity in retail sites. Three eatery tenants are coming to this Battlefield Road retail center.

Industrial spaces in demand

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Major occupancies by Springfield businesses in the first quarter helped to overcome industrial vacancies recorded during the last quarter of 2016. According to commercial real estate tracker Xceligent, the area’s industrial market netted 475,532 square feet of positive first-quarter absorption.

“Our transaction volume was significantly higher than it was in 2016. In the industrial market alone in the last three months, we transacted close to 300,000 square feet, leased or sold,” said Ross Murray, vice president of R.B. Murray Co. “That’s pretty significant movement.”

According to Xceligent’s Market Trends report, the industrial market vacancy rate in the area dropped to 3.4 percent from 3.6 percent in first-quarter 2016.

“As demand continues, generally rent pressure or increases can follow,” Murray said. “We have somewhat of a shortage of quality, newer warehouses available for sale or lease.”

The largest mover in the industrial sector was Springfield Sign & Graphics Inc. The company that does business as Springfield Sign in the first quarter completed its move to over 145,000 square feet in Partnership Industrial Center at the former home of Polar Tank Trailer LLC. Springfield Sign vacated nearly 15,000 square feet at its former headquarters, 2531 N. Patterson Ave.

Other significant changes were:

• NewStream Enterprises occupied nearly 121,000 square feet at the Solo Cup building, 1100 N. Glenstone Ave.;

• Kraft Heinz Co. leased 96,000 square feet at Springfield Underground;

• McLane Co. Inc. leased 81,000 square feet at North Creek Business Park; and

• Hogan Truck Leasing Inc. opened a $2.8 million, 13,600-square-foot commercial truck repair and office building at 4475 E. Mustard Way.

Positive absorption, which refers to the change in occupied space, expressed in square feet, in the industrial sector is expected to continue to increase throughout the rest of the year.

Shifts in retail
Murray said the industrial sector is trending toward becoming the new retail as e-commerce has continued to take off.

“Products are being shipped directly to the customer, rather than them walking into a traditional store,” Murray said.

Retail data from Xceligent’s report – which covers Springfield and the surrounding areas of Strafford, Rogersville, Ozark, Nixa, Republic and Willard – showed negative 38,813 square footage of first-quarter absorption.

Murray sees retail sites beginning to serve different purposes.

“I think it will be more entertainment-based and designed around the customer’s overall experience,” Murray said of an emphasis away from product-based retail to food and socializing concepts.

Retail vacancies were flat at 5.2 percent in the first quarter compared with a year ago, according to Xceligent. However, the report noted over 300,000 square feet of retail space is under construction. Large retailers like Burlington Coat Factory, Petco and Ross Dress for Less are signed on to take up half of that square footage at Springfield Plaza in west Springfield.

Additionally, R.B. Murray handled preleasing for three tenants at 1008 E. Battlefield Road: Starbucks, Jersey Mike’s and Pie Five Pizza.

Sluggish office sector
In the office sector, a negative 36,698 square feet of first-quarter absorption led to a slight vacancy rate increase to 8.4 percent in the quarter.

Currently, 285,000 square feet of office space is under construction, the report said.

Occupancies by businesses Centene Corp. and Neuromuscular Pain Relief Center were unable to make up for the vacancies of The Passages, a traveling museum, U.S. Freight Logistics and Missouri Employers Mutual, as well as several smaller companies.

Murray said R.B. Murray’s office transactions included 51,000 square feet at 4320 W. Kearney St. leased to EFCO Corp. and an 85,000-square-foot building at 2960 N. Martin Ave., formerly FedEx Ground, that was leased to Ozarks Coca Cola/Dr Pepper Bottling Co.

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