Toledo strip center construction up but is it needed?

(And is it really up...)

At first when you read the article in this morning's Toledo Blade it sounds like some good news:

After a slowdown because of poor economic conditions since 2000, strip shopping center construction in the Toledo area is heating up again.

At least six centers of 10,000 to 20,000 square feet have opened since the first of the year or are nearly completed. Four other projects are planned, and others are in the initial market test stages.

Plus, several centers are getting makeovers to compete with the new projects.

"There is a demand for new retail space in the market," said Duke Wheeler, a commercial real estate agent with CB Richard Ellis/Reichle Klein in Maumee. "We're not seeing a lot of the big users fighting for space, but we are seeing new smaller users looking for space."

A CB Richard Ellis midyear report on local retail found increased demand ended an 18-month period where average asking rents were dropping.

I remembered hearing some discussion when the retail vacancy rates for Toledo were released after the first of the year, so I went looking. I found this February 2006 article that is titled:

Retail vacancies in area soaring

So which is it? If the mid year reports showed that there was an increased demand, how could in February it be reported that retail vacancies in 2005 were soaring?

The February 2006 article goes on:

Retail vacancies in metro Toledo last year rose to levels not seen since the last recession in a market best described as feast or famine, a new industry report shows. The percentage of empty stores and other retail buildings shot up to nearly 14 percent at year's end, according to the commercial realty CB Richard Ellis, Reichle Klein, of Maumee.

At the end of 2004, vacancies were at 11 percent. They last topped 13 percent at the end of 2001, just after a recession.

While population in the metro area has not increased, retail construction has boomed over the past five years. The amount of space rose 13 percent to 18.3 million square feet, CB Richard Ellis said. The biggest gains were made in Perrysburg and Northwood, where retailers have added 1 million square feet for a 66 percent increase.

Still, there is conflicting data about the number of empty stores and in key corridors.

CB Richard Ellis said vacancies range from 9 percent in Perrysburg and Northwood to 16 percent in West Toledo and Sylvania as well as east Toledo and Oregon.

Going back to February of 2005

"The market took a breather," said Dave Long, a retail specialist at CB Richard Ellis/Reichle Klein, of Maumee.

"In 2003, we had a ton of new construction come on-line and a ton of vacancies, especially with the Food Town closings. In 2004, the market corrected itself and settled down."

Studies by two commercial realty agencies point to lower retail vacancy rates last year. CB Richard Ellis claims the number of empty stores and restaurants fell to 10 percent of available space from 12 percent at the end of 2003.

Preliminary figures from rival Michael Realty Co. of Toledo also suggest that two percentage points were shaved off the retail vacancy rate. But Michael, which bases its estimates on a different mix of properties, maintains that the overall retail vacancy rate in the market was 8 percent.

These are some of the same companies reporting different information. If we had a "ton" of new construction in 2003 then today's report isn't accurate in claiming that "After a slowdown because of poor economic conditions since 2000, strip shopping center construction in the Toledo area is heating up again." If there was a record high 14% vacancy rate in 2005, then how six months later could there be magically an increased demand?

Should we celebrate? Should we wonder why it seems like neither the reporters or the indviduals asked to comment goes back to read the previous stories to see what was written before? If today it's being stated:

The new strip center activity, Mr. Wheeler said, could add 40,000 to 60,000 square feet to the nearly 18 million square feet in the area.

And in February of 2006 it was stated:

The amount of space rose 13 percent to 18.3 million square feet,

How much of a net gain are we really getting with these new strip shopping centers...18.3 as quoted earlier is larger than "nearly" 18 million with the new centers. Wouldn't that mean that there was actually a larger increase in the years prior than what we are seeing now?

If the vacancy rate is that high all we are doing is what is mentioned in today's article:

Leasing in such centers generally is by tenants in older strip centers,

Which means tenants go from older buildings to new buildings which leaves the old buildings vacant and does not have a positive impact on the overall vacancy rate. While the increase of construction jobs is good news, after the new strip centers are built all that is being done is shuffling rent money so that the new buildings gain and the old buildings lose.

Nor does that address any of this conflicting information...I do know of one additional increased benefit to Toledo from this though, increased purchases of headache medication...