q3 2020 retail - f.tlcollect.com

Q3 2020 RETAIL © 2020 CBRE|Hubbell Commercial

MARKETVIEW SNAPSHOT - Q3 2020

Vacancy Up Amid Big Box Closures, Pullback in Lease Activity

Figure 2: Recent Vacancy Trend

Figure 1: YTD Leasing Activity By Sector

Figure 3: Retail Investment Sales Volume

Former Gordmans at 2590 Hubbell Ave, Des Moines. For Sale/Lease.

YTD Net Absorption (Big Box)

(272,715) SF

Vacancy Rate (Neighborhood & Community Centers)

12%

Vacancy Rate (Big Box)

6.20%

YTD Net Absorption (Neighborhood & Community Centers)

(101,678) SF

PERFORMANCE HIGHLIGHTS • Greater Des Moines retail vacancy is up 203 bps

YTD largely driven by a considerable pullback in new lease activity and big-box closures – most notably Gordmans, which added 224,000 sq.ft. of big-box availability to the market in closing all three locations.

• YTD lease activity has been sparse compared to prior periods with an approximate 44% decline in number of new deals reported year-over-year. Professional, medical and personal services continue to drive user activity accounting for approximately 40% of leases reported YTD. Stylin’ Paws signed a lease at Tuscany Village Center in Urbandale for 14,800 sq.ft. representing the largest lease of the quarter and the only deal over 10,000 sq.ft.

• The long-vacant former Toys R Us at 1211 E Army Post Rd sold to Johnson Healthcare for $1.7M, or $37 per sq. ft. The 45,000 sq.ft. building will be repurposed into an outpatient clinic for veterans and is expected to deliver in late 2021.

• Investment sales volume has been steady through the first three quarters at $41.6M. Single-tenant net-lease transactions accounted for 87% of total volume and is on pace to eclipse the previous six-year average of net-lease sale activity (See Figure 3).

MOVING FORWARDLooming closures and continued uncertainty surrounding Covid-19 will put upward pressure on vacancy levels and likely hinder any potential rent growth in the near-term. Submarkets like the CBD core that are heavily dependent on office lunch patrons will likely face the strongest headwinds moving forward as we suspect Panera Bread will not be the last of closures downtown.

While the outlook may be stark in the near-term, we are optimistic looking beyond the next 2-3 quarters. We anticipate the accelerated redevelopment of obsolete retail space paired with restored consumer confidence and pent up demand will result in an overall supply and demand correction.

21.92%

19.18%

4.11%16.44%

38.36%

Retail Trade (Non-Service)

Services - Restaurants

Services - Recreation & Entertainment

Services - Fitness, Health & Beauty

Services - Professional, Medical & Personal

8.60% 8.30%8.80%

9.60%

10.50%

12.0%

3.40% 3.10%3.80%

4.40%

6.20% 6.20%

2.50%

3.50%

4.50%

5.50%

6.50%

7.50%

8.50%

9.50%

10.50%

11.50%

12.50%

Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020

Neighborhood & Community Center Big Box

21.92%

19.18%

4.11%16.44%

38.36%

Retail Trade (Non-Service)

Services - Restaurants

Services - Recreation & Entertainment

Services - Fitness, Health & Beauty

Services - Professional, Medical & Personal

$0

$20,000,000

$40,000,000

$60,000,000

$80,000,000

$100,000,000

$120,000,000

2014 2015 2016 2017 2018 2019 2020 YTD

Single-Tenant Net Lease Strip Center Neighborhood & Community Center


MARKETVIEW GREATER DES MOINES RETAIL

Submarket Market Rentable

Area (SF) Vacant (SF) Vacancy Rate YTD Net

Absorption (SF)

Western Suburbs 2,317,196 228,514 9.9% -65,723

Northwest 71,887 23,704 33.0% -4,119

Northeast 683,474 86,755 12.7% 8,681

South 727,432 119,699 16.5% -12,340

Ankeny 442,759 50,445 11.4% -28,177

Greater Des Moines Total 4,242,748 509,117 12.0% -101,678

Suburban Neighborhood & Community Center Market Statistics

Notable Sales

Big Box Market Statistics

Neighborhood Market Rentable

Area (sf) Vacant (sf) Vacancy Rate YTD Net

Absorption

Downtown Core 158,205 57,129 36% -6,120

Court District 141,439 6,023 4% 0

East Village 246,418 28,562 12% -2,951

Western Gateway 102,593 12,686 12% 0

South of MLK 100,023 48,609 49% -13,531

CBD Total 748,678 153,009 20.44% -22,602

Downtown Retail Market Statistics

Submarket Market Rentable

Area (sf) Vacant (sf) Vacancy Rate YTD Net

Absorption

Western Suburbs 4,736,085 285,692 6.0% -87,008

CBD 59,996 0 0.0% 0

Northwest 450,270 0 0.0% 0

Northeast 1,369,811 146,694 10.7% -86,811

South 1,375,701 151,496 11.0% -112,296

Ankeny 1,396,295 0 0.0% 13,400

Greater Des Moines Total 9,388,158 583,882 6.2% -272,715

Property City Submarket Sale Price Sale Price PSF Sale Type

4900 Mills Civic Pkwy (Walgreens) West Des Moines Western Suburbs $5,700,000 $395 Investment

1211 E Army Post Rd (Former Toys R Us) Des Moines South $1,700,000 $37 Owner/User

1800 NW 86th St (Plaza 1800) Clive Western Suburbs $1,360,000 $45 Investment



YEAR DES MOINES MSA Year - Over - Year

2013 $8,411,526,797 1.71%2014 $8,787,650,388 4.47%2015 $9,346,317,273 6.36%2016 $9,769,581,274 4.53%2017 $10,071,879,055 3.09%2018 $10,128,863,313 0.60%2019 $10,382,430,906 2.50%

Source: Iowa Retail and Use Tax Report, Iowa Department of Revenue and Finance

Annual Retail Sales LARGEST EMPLOYERS EMPLOYEES

Wells Fargo & Company 14,500UnityPoint Health - Des Moines 8,026Principal 6,500Hy-vee 6,400Nationwide 4,525Mercy Medical Center 4,228John Deere 3,089Vermeer Corporation 2,500Corteva 2,495JBS USA 2,300Pella Corporation 2,224Wellmark Blue Cross Blue Shield of Iowa 2,000UPS 1,600Bridgestone Americas Tire Operations 1,600Mercer 1,560YMCA 1,300EMC Insurance Companies 1,269Casey's 1,200Tyson Fresh Meats, Inc. 1,200

Population644,590 (2018 MSA)

Sources: Greater Des Moines Partnership Bureau of Economic AnalysisUS Bureau of Labor Statistics - December 2018

GREATER DES MOINES ECONOMIC DATA

Mining, logging, and construction Manufacturing Trade, transportation, and utilities Information

Construction, 6%

Manufacturing, 5%

Transportation, 19%

Information, 3%

Financial Activities, 16%Professional and

Business Services, 13%

Education and Health Services, 14%

Leisure and Hospitality, 9%

Other Services, 3%

Government, 12%

Unemployment Rate8.0%

Sources: US Bureau of Labor Statistics


2020 - Hubbell Commercial Brokers, L.C., d/b/a CBRE|Hubbell Commercial. The information contained herein has been obtained from sources believed reliable. While we do not doubt its accuracy, we make no guarantee, warranty or representation, either expressed or implied, as to its accuracy or completeness.

SUBMARKET BOUNDARIES

Central Business District (CBD) - Includes the Western CBD and the East Village, extending west to Martin Luther King Jr. Parkway and east to East 14th Street.

Western Suburbs - Encompasses West Des Moines, Clive, Urbandale, Windsor Heights, Johnston, Grimes, Waukee, and some unincorporated areas of Polk, Dallas, and Warren Counties.

Northwest - Includes Northwest Des Moines and Western Saylor Township.

Northeast - Consists of Northeast Des Moines (extended south to the Des Moines River), Pleasant Hill, Altoona, Eastern Saylor Township, and Delaware Township.

South - Comprises Southwest Des Moines, Southeast Des Moines (south of Des Moines River), and some unincorporated areas of Polk and Warren Counties.

Ankeny - Evaluated separately.

DES MOINES CENTRAL BUSINESS DISTRICT (CBD)

GraysLake

Des MoinesRiver

RacoonRiver

SaylorvilleLake

ANKENYREGIONALAIRPORT

DES MOINESINTERNATIONAL

AIRPORT

NW 10

0TH S

T

ANKE

NY B

LVD

E EUCLID AVE

STATE

ST

SE 14

TH ST

BROADWAY AVE

DELA

WARE

AVE

HUBB

ELL A

VE

NE 78TH AVE

DELA

WARE

AVE

SW 9T

H ST

2ND

AVE

E UNIVERSITY AVE

SW 63

RD ST

86TH

ST

NW 70TH AVE

GRAND AVE

ARMY POST RD

MERL

E HAY

RD

100T

H ST

EP TRUE PKWY

DOUGLAS AVE.

63RD

ST

RAILROAD AVE

INGERSOLL AVE

NW 86

TH ST

RACCOON RIVER DR

ML KING JR PKWY

JORD

AN CR

EEK PK

WY

MILLS CIVIC PKWY

FLEUR

DR

NW 14

2ND S

T

GRAND AVE

N 1ST

ST

HICKMAN RD

UNIVERSITY AVE

NW BEAVER DR

NW 12

8TH S

T

SW 8TH ST

163

R22

28

5

415

5

141

65

65

65

5

28

69

6

28

5

6

44

65

69

6

6569

28

80 35

35

235

35

80

235

80

80

35

CARLISLE

NORWALKCUMMING

URBANDALE

DES MOINES

CLIVE

WESTDES MOINES

WARRENCOUNTY

MADISONCOUNTY

WAUKEE

JOHNSTONGRIMES

BONDURANT

ALTOONA

PLEASANTHILL

ANKENY

POLKCOUNTY

DALLASCOUNTY

WINDSORHEIGHTS

CBD

SOUTH

NENW

WESTSUBURBS

DES MOINES METROPOLITAN AREA

GRAND AVE

GRAND AVE

GRAND AVE

GRAND AVE

E GRAND AVE

9 TH ST

WALNUT ST

WALNUT ST

W

ALNUT ST

E WALNUT ST

3RD ST 3RD

ST 3RD ST SW

3RD ST SW

2ND

ST IND

IAN

OLA

AVE

2ND

AVE 2ND

AVE 2N

D AVE

6TH AV

E 6TH AV

E 6TH AVE

7TH ST 7TH

ST 7TH ST 7TH

ST SW 7TH

ST

SCOTT AVE

SCOTT AVE

E ST

H S

T

SE

6TH

ST

E 6T

H S

T

PEN

NSY

LVA

NIA

AVE

E

7TH

ST

SE 7TH ST SE 7TH

ST

E 14 TH ST

SE 14TH ST E 14TH

ST

KEOSAUQUA WAY 8TH ST 8TH

ST

W MARTIN LUTHER KING JR PKWY W MARTIN LUTHER KING JR PKWY

W MARTIN LUTHER KING JR PKWY

MA

RTIN LU

THER JR PKW

Y MA

RTIN LU

THER KIN

G JR PKW

Y FLEUR D

RIVE

LOCUST ST

LO

CUST ST

L

OCUST ST

LO

CUST ST

18TH

ST

COURT AVE

COURT AVE

E COURT AVE

5TH AV

E 5TH AVE 5TH

AVE SW 5TH

AVE

DES MOINES ST

DES MOINES ST

LYON ST

E 12TH ST E 12TH

ST

E 5TH ST

E ELM ST

E 2ND

ST

E VINE ST

E 5TH ST

PARK ST

9TH ST

CENTER ST

13TH AVE

M

ULBERRY ST

4TH ST

E 1ST ST

CHERRY ST

E LIVINGSTON AVE

SCHOOL ST OAKRIDGE DR CROCKER ST

17TH ST 17TH

ST 17TH ST

INGERSOLL AVE INGERSOLL AVE

HIGH ST

HIGH ST HIGH ST

CENTER ST

12TH ST

CENTER ST 10TH ST

12TH ST 12TH

ST

TUTTLE ST

4TH ST

WATSON POWELL JR WAY

COTTAGE GROVE AVE COTTAGE GROVE AVE CROCKER ST 15TH ST 15TH ST 15TH

ST SW 16TH

ST

20TH ST

WOODLAND AVE WOODLAND AVE

E 9TH ST E 9TH

ST

MA

PLE

ST

E 4TH ST E 4TH

ST E 4TH ST

ROBE

RT D

RAY

DR

SW W

ATER ST

SW W

ATER ST

19TH ST 19TH

ST

SE 14TH ST

TUTTLE ST

MURPHY ST

OAKRIDGE AVE

15TH ST

16TH ST

18TH ST

16 TH ST

LINDEN ST

11TH ST

SCHOOL ST 8TH ST

SE 10TH ST

SE 9TH ST

RACCOON ST

SE 8TH ST

E 3RD ST

E MARKET ST

VINE ST

MARKET ST

W R

IVER

DR

E 13TH

E 13TH

PLEASANT ST

SCHOOL ST

SCHOOL ST LYON ST

LYON ST

Racoon River

Des Moines River

Des Moines River

ELM ST

235

State Capitol

PrincipalPark

Iowa EventsCenter

BotanicalCenter

East Village

Western Gateway Park

801 Grand Civic

Center

State Historical

Museum

Court AvenueDistrict

While there are a variety of retail uses, this survey focuses on regional shopping malls, neighborhood and community centers, and big box retail. �e neighborhood and community centers analysis focuses on multi-tenant with small to medium size occupiers. Big box includes grocery stores, home improvement stores, and larger retail and discount stores containing approximately 20,000 SF or more in size. �e 2019 Marketview Snapshot contains information collected.

METHODOLOGY

Sources: CoStar Group, Polk County Assessor and Dallas County Assessor

q3 2020 retail - f.tlcollect.com

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