Commercial Real Estate Agents See Market Upturn
YOUNGSTOWN, Ohio -- This time of year, as fall edges toward winter, the market for office and retail space slows until after the holidays. Clients put off decisions on projects until the first of the New Year. Usually, but not this time, John Horvath says.
“I’m starting to see an uptick but it’s more of a gradual uptick in the market [that] could be based on a lot of things,” says Horvath, broker associate with commercial services at Northwood Realty Services, Poland. Horvath reports demand for office space is gaining strength.
“Retail is cranking along but we’re seeing doctors’ space that’s getting leased up and getting purchased, and seeing service industries expanding,” he reports.
“Again, it’s a slight uptick” but good for this time of year, Horvath remarks. “We’re not in the middle of summer, which is when you expect it. For this time of year I think it’s encouraging.”
Oil and gas work in the region is “going to start to help our market,” he predicts. “So the prognosis for the retail/office market over the next year or two is really encouraging.”
Horvath sees “a lot of pent-up demand out there” while noting considerable space remains available. “As the vacancy factor goes down, you’re going to see developers out there building new offices. It’s cyclical,” he says. “As existing space gets absorbed then the lease rates go up and developers come in and build new space.”
Jim Grantz, broker associate of Edward J. Lewis Inc., Youngstown, says he recently completed office leases for space that had been on the market a couple years. “The good news is that a part of our market that had been slow seems to be picking up” because of oil and gas industry, he says. This activity is creating demand for engineers and other professionals who require office space to serve the emerging industry.
Grantz also recently completed a lease for a vascular surgery center.
In particular, prospective buyers or lessees are looking for office space with ready access to Interstate 80, as in Austintown and Liberty Township.
“This year between Liberty and Austintown, I’ve done seven office space deals,” Grantz says.
Because of the available inventory, “It’s going to be a while before we see any significant new construction in office space” unless for a highly specialized use, he says.
On the retail side, Grantz agrees that while the market usually slows this time of year, he is working on some restaurant deals, which is “a good sign.” Because restaurant chains typically have their own image and franchise requirements, he expects continued new construction in that segment.
“On a local basis we’re doing a little better than other parts of the country, and because of that we’re getting attention from people who have capital for expansion. They’re looking at our area for a safe bet,” he says.
Also, deal flow and inquiries are good for investors who want to purchase properties here. “Half the buyers are out of this area who are looking at our area as being stable,” Grantz says.
Kutlick Realty LLC, Boardman, is lining up for another successful year, reports broker/owner Bill Kutlick. Overall, new construction shaped this year more than in 2011, he says.
“That said, we are working on deals that won’t happen until 2013 that are new construction also,” a factor that had been “pretty lean” in recent years, he continues. “That’s a positive sign.”
New construction includes the recently completed Dick’s Sporting Goods and a new Dunkin’ Donuts to be built in Boardman, and Jimmy John’s and Hot Head Burrito chain restaurants under construction in Austintown.
Kutlick also says he has “multiple deals” with the O’Reilly Auto Parts and Advance Auto Parts chains.
Activity is driven in part by low interest rates for qualified borrowers, he explains. “If you are a national or regional chain, the inventory out there really isn’t that abundant. Therefore if you want space, they’re starting to build,” he says.
Rates for newly constructed space are “in line” with the cost of building and higher than those for existing properties, Kutlick says. “The remaining inventory is still stable. It’s not really going down much more,” he says.
If anything, there may be a slight uptick in pricing because of inventory levels, Kutlick observes.
Kutlick disputes the suggestion there’s any kind of seasonal dropoff. “I don’t see a slowdown this time of year,” he says.
Alan Friedkin, broker with Friedkin Realty LLC, Liberty Township, says positive economic news in the region is helping to drive demand.
“We’ve seen our worst,” he says. In general, people are upbeat because of developments such as the new V&M Star mill, activity at the General Motors Lordstown plant, the new racetrack coming to Austintown (See page 45) and even the prospect of new flights coming to Youngstown-Warren Regional Airport.
“We could be busier but we’re very grateful for what we’ve got,” he says.
Friedkin has kept busy with signing several new tenants at Liberty’s Churchill Commons Plaza – among them a physician’s office and comic book store – and he’s in discussions with two potential tenants in hopes of bringing the plaza to full occupancy by early 2013. He has completely leased the Big Lots plaza on Belmont Avenue and put Fiesta Tapatia, a Mexican restaurant, on South Avenue in Boardman.
“There’s plenty of unleased space out there but it’s nice to see some fresh buildings going up,” Friedkin says, pointing to a new strip center going up on Route 224 in Boardman as well as the new Dunkin’ Donuts, the new hotel being built at the Eastwood Mall Complex and the new Cheddar’s and Firebirds restaurants.
Friedkin also notes the Menards hardware chain is taking over the long-vacant Elm Road Walmart building in Warren.
In downtown Youngstown, Richard Mills, president of Ohio One Corp., reports that occupancy at his properties is averaging better than 90%. Ohio One properties include City Centre One, where Green Haines Sgambati Co. L.P.A. is relocating, and the Ohio One Building, where the Ohio Autism Society is leasing space.
Mills is encouraged, he says, by the restaurants and other new activity in the central business district, such as the creation of the National Additive Manufacturing Innovation Institute there.
“That’s huge. Those are very encouraging signs for the continued resurgence of downtown,” along with the “tremendous influx” of young people living downtown, Mills remarks.
EDITOR'S NOTE: This story was first published the MidNovember edition of The Business Journal. CLICK HERE to subscribe.
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