Not the stores themselves, with merchandise, but the property market itself, with space?
Not yet, but Carl Edwards said he can see an overbuilt retail market on the horizon.
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Store building keeps booming, both with big shopping centers filling with national and regional pre-leased tenants, and smaller neighborhood strip centers out to attract local shops.
It's not the big new places, such as 240 Penn Place in south Oklahoma City and University Town Center in Norman, that pose potential problems, Edwards said. They generally attract chains that are expanding in the metro area or coming here for the first time.
It's the smaller new centers, which tend to draw tenants from other, older properties, leaving vacancies that are hard to fill. That's what Edwards, co-founder and co-managing partner of Price Edwards & Co., is keeping his eye on.
Price Edwards spelled it out in its recent midyear retail market summary.
•The Oklahoma City metro area has about 38 million square feet of retail space, not counting strip centers under 25,000 square feet, which no one tracks.
•Vacancy at midyear was 10.73 percent, one percentage point higher than a year ago.
•More than 2.25 million square feet of new space is under construction, and as much 1 million square feet more that has been announced but not commenced is in the pipeline at between 10 and 15 new shopping centers.
•Another 1 million square feet of space could come from future phases of currently operating retail properties.
Then there is the space that goes uncounted, which could amount to another 2.5 million square feet.
"There continue to be numerous strip centers that are smaller than 25,000 square feet being built all over the metropolitan area,” Price Edwards said. "These strip centers are increasing significantly as more and more developers are building spaces for small retailers. Many of these have some vacancy, and they must be considered when evaluating our retail market.”
Uncertainty surrounds the smaller retail properties, the firm said.
"While it is unclear how much (space is) pre-leased, there is a sense that many of them are spec, and their success could be affected by the large amount of new competition. We continue to be concerned about this new construction taking tenants from a number of our older centers and causing increased vacancy,” Price Edwards said.
In an interview, Edwards was reluctant to use the word "overbuilt.”
"Well, I'm saying there is a chance,” he said. "If you start seeing a lot of delinquencies among some of the smaller tenants, and some vacancies and some turnover, there's a red flag and we should start to be concerned.”
The retail market is still healthy, he said, but it is showing a few signs of stress, which are minimized by the strong local economy.
"It's not at such a significant amount that we could say we're in trouble,” Edwards said. "I'm just cautioning everybody to watch out.”
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Michael, No one cares about the paseo area including me. The area is scroungy and old and blighted and past it's time, it needs to be razed and returned to pasture land that would be much more attractive than the old ghetto buildings that are there now.
Unfortunately Mr. Edwards is right, the boom in overbuilding retail space will begin to errode neighborhoods with vandalized strip malls, where no one occupies the space. You see half empty neighborhood strip malls, because family owned retailers can't compete with stores, like TJ MAX, TARGETS, Wal-Mart, MARSHALS who require thousands of square feet of space to sell the 10,000 pieces of the same product (does everyone need the same dress like her neighbor). I personally won't shop these stores because of the fact they have destroyed the American Dream of the small man being a successful retailer. I want Investors and Developers return to building attractive shopping centers throughout the neighbor hoods where people live...not so we have to travel half way across town for something everyone else has.
The Paseo Area, could use a grocery store, a bakery, and a gas station if anyone is listening.
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Work continues on University Town Center near Robinson and Interstate 35 in Norman. The center is adding 700,000 square feet of space to metro-area retail property rolls. By STEVE SISNEY, THE OKLAHOMAN
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The Paseo Area, could use a grocery store, a bakery, and a gas station if anyone is listening.