Is the new Akin's Natural Foods store near 84th Street and West Center Road driving traffic to its retail neighbors?
Staffers at Westlake Ace Hardware and the Cleaning Mart aren't sure yet, but they are convinced that with all the shopping center's storefronts occupied, it's making “a better impression” on passers-by, said Bud Dobson, the hardware store's floor manager.
“A full shopping center is a better shopping center,” said Luanne Spellman, also a Westlake employee. Last spring, the natural foods and organic grocer moved into a 9,000-square-foot space, a former Hollywood Video outlet that had been vacant since 2010.
The experience of “feeling full” for the first time in years is being repeated around the area, as many formerly vacant storefronts, properties and shopping centers attract new tenants, and in some cases undergo major renovations.
“Instead of going to the edge of town, people are starting in-fill in the existing, proven markets,” said Winsley Durand, the Greater Omaha Chamber of Commerce's senior recruitment director.
Greater Omaha's retail vacancy rate has been falling at a healthy clip. At midyear, the overall retail vacancy rate stood at 8.6 percent, down from 11.2 percent a year ago, according to the most recent report by Colliers International. Other reports cite similar percentages or also describe a vacancy rate that has been declining for the third year in a row.
The list of new retailers include Walmart Neighborhood Markets, organic grocery stores such as Akin's and Natural Grocers by Vitamin Cottage, dry cleaners, fast-food restaurants — many new to the Omaha market — and independent retail shops.
“This is the first time that the retail vacancy rate has been this low since the fourth quarter of 2005 when the ... rate was 8.2 percent,” said Adam Marek, vice president of Colliers International's Omaha office.
A healthy dose of post-recession confidence is boosting retail activity. “My view ... is that it has a lot to do with people getting more comfortable with the economy,” Marek said.
Trenton Magid, principal of World Group Commercial Real Estate in Omaha, said the retail sector “is a lot stronger than the office or industrial sectors.”
Retailers are clamoring to find space along high traffic corridors, such as 72nd and Dodge, Magid said. “There's a ton of demand there.” National chains “would die to be there,” so much so that some are willing to buy a building and tear it down, he said.
Raising Cane's at 7060 Dodge St. tore down the old Family Fun Center, a high-dollar proposition, Magid said.
Walmart received city approval last month to demolish the former Target store at 360 N. Saddle Creek Road, vacant since 2006, and build a 40,000-square-foot Walmart Neighborhood Market. Four of the seven smaller-format grocery stores planned in the Omaha area have already opened. And in some cases, their arrival has helped revive the immediate area.
“If you look at the Walmart Neighborhood Market at 90th and Lake Streets —- they took an older shopping center and totally refurbished it using the grocery store as an anchor,” Magid said.
At 50th Street and Ames Avenue, Walmart is constructing a 180,000-square-foot Walmart Supercenter, the site of a former Baker's store, which has had various vacancies since 2006. The Supercenter is expected to open early next year and attract other retailers to the area.
At the Frederick Square Shopping Center at 84th and Frederick Streets, which is anchored by Shopko and Wright Career College, space has gotten so tight that owners are building an additional 6,000 square feet of retail space, Magid said.
At Aksarben Village, 40,000 square feet of new retail space is being constructed and should be available for occupancy by the end of the year.
In Council Bluffs, the new owners of the Mall of the Bluffs, New York-based Namdar Realty Group, announced last month that a Planet Fitness club will move into an anchor space vacated by Barnes & Noble in 2011. Halloween City, a division of the national Party City chain, has signed a lease through mid-November, and a Calendar Club again will lease through Jan. 15.
The mall still has some big spaces to fill, but Namdar pledges to return the shopping center to its former glory.
The health and wellness retail category, including fitness centers and natural grocers, has absorbed a fair amount of vacancy, said Leigh Andres, commercial leasing manager at the Slosburg Co.
In some areas, rents that dropped 10 percent to 20 percent during the recession haven't returned to pre-recession levels, allowing some retailers to move to more desirable locations. The Lerner Co. describes the shuffle as the “flight to quality.”
Space at “A” level —- highly desirable shopping centers —- “in most trade areas is very tight.”
“The supply of space in B centers varies by trade area, and the supply of spaces in C quality centers is abundant throughout the market,” the Lerner's 2012 Omaha Retail Market Summary reports.
Lerner expects a “sizable portion of the obsolete C quality space in the market to be either converted to alternate uses or demolished during the coming years.”
The Lerner report describes a more gradual retail rebound than some other reports, but expects the trend toward declining vacancies to continue. “The residential market in Omaha is improving rapidly, and that's a key factor in helping us chip away at retail vacancies,” said Rick Quinlevan, president of Lerner Brokerage Services.
A lack of new construction is spurring the redevelopment of distressed properties, the Lerner report says.
Although Nebraska Crossing Outlets in Gretna, for example, is being built from the ground up, the 350,000-square-foot shopping center replaces a 20-year-old outlet mall demolished last spring. The former 170,000-square-foot outlet mall, built in 1993, was floundering in recent years.
It's unclear what effect Nebraska Crossing will have on local malls and department stores when it opens Nov. 15 with 65 stores.
Nebraska Crossing will open with many new-to-market retailers such as Michael Kors and Kate Spade New York, which has some experts predicting that it's only a matter of time before those brands open full-price stores in the area.
“From what I've heard, it could potentially be the start of other things for them,” Durand said. “The developers of that particular property have larger plans for those retailers.”
Those developers — Frank Krejci of Century Development and Rod Yates of OTB Destination — also have redevelopment plans for Crossroads Mall, a center long overdue for a makeover at the coveted 72nd and Dodge intersection. Krejci is the majority owner of Nebraska Crossing and owner of Crossroads.
Another trend has existing shopping centers filling in the blanks with nonretail tenants, said Julia Roberts, an agent with NAI NP Dodge, the commercial real estate division of NP Dodge.
“Medical doctors and clinics are taking up a considerable amount of square footage. As the population ages, they're trying to move into more convenient locations.”
Overall, the retail mix is expanding, to the delight of consumers. “Omaha is now gaining the attention of retailers that the community has always hoped for, such as the addition of H&M at Westroads Mall” in fall 2014, Andres said.
Said Durand, “Retailers are starting to recognize Omaha as a strong market.”