Shopping Centers Today

JUL 2018

Shopping Centers Today is the news magazine of the International Council of Shopping Centers (ICSC)

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44 S C T / J U L Y 2 0 1 8 E ach spring the city of Louisville enjoys the national spotlight, as host to the Kentucky Derby. And this famed horse race, preceded by a two-week-long festival, has put Louisville on the map in more ways than one. With a yearly economic impact of an estimated $217 million, the event has helped make this city an economic powerhouse both in the state and the surrounding region. Moreover, the local economy has benefited from Louisville's central location and from its business- friendly climate. With a metro-area population of about 1.3 million, Louisville is the largest city in Kentucky and is also home to some of the largest employers in the U.S.: Humana, Kindred Healthcare and Yum Brands among them. "Nashville [Tenn.] is one of the most vibrant markets in the Southeast, but Louisville isn't far behind," said Jeffrey Pape, a managing director at GBT Realty Corp., a commercial real estate devel- opment firm based near Nashville. In 2015 GBT Realty opened two power centers in suburban Louisville: Jefferson Commons and Middletown Commons. Together, these two comprise some 500,000 square feet of retail space, and they brought the first two Academy Sports & Outdoors stores into the market. Louisville has not been immune to the store closures that have beset other parts of the country, but the New retailers mitigate impact of empty boxes on Louisville market By Anna Robaton S I T E S & C I T I E S W H E R E R E TA I L D E V E LO P M E N T I S H OT Space to fill growing local economy has fueled a healthy demand for retail space, help- ing to mitigate the impact. In November 2017 Louisville's unemployment rate was at about 3.6 percent, versus the national average of 4.1 percent that same month. "Louisville is getting the majority of the job and industry growth in the state," said Pape. Out of 78 U.S. markets the Urban Land Institute and PwC ranked for real estate prospects in their 2018 Emerging Trends in Real Estate report, Louisville placed 55th. The city is also among the top 20 markets to watch for home-building prospects, the report says. "It's a very stable market," said Robert Schwartz, a Louisville-based senior vice president of retail services at CBRE. "When you read about national retailers closing stores, Louisville is usually one of the last markets for them to close, just because they do fairly well in sales there." The Louisville retail real estate market had a negative net absorp- tion rate in the second half of 2017, according to CBRE. Its retail vacancy rate stood at 7.6 percent, up slightly from the first half. But asking rates for both big-box and small-shop space rose, to $7.63 per square foot and $17.47 per square foot, respec- tively, over the first half of the year. The total-market average asking rate for retail space was $11.18 per square foot, which represented an increase of 77 cents per square foot from the first half. Unlike some other markets, Louisville is not burdened with an overabundance of vacant big-box stores, says Schwartz. Many landlords have been able to redevelop spaces vacated by struggling or defunct chains and to attract new tenants — particularly restaurants and movie theaters, or discount retailers, fitness centers and similar nontraditional tenants. Aldi, Big Lots, Hobby Lobby, Roses and Ross Dress for Less are among the chains that have absorbed large blocks of retail space in recent years. New brands have entered the market too, among them Dave & Buster's, Metro Diner and Top Round Roast Beef, a Los Angeles–based concept that chose Louisville as its second location. The market's first Round 1 Bowling & Amusement facility is set to open later this year in a former Macy's space at Jefferson Mall. Before Macy's closed that store last year, CBL Properties, $11.18 The Louisville market's average asking rent per square foot, according to CBRE

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