2010 Midyear Report – RETAIL: National tenants return as retail market comes back to life
By Jeff Quackenbush, Business Journal Staff Reporter
Third-quarter figures for North Bay retail real estate are expected later this month. However, retail space vacancy is expected to decrease in a number of submarkets in the third quarter, leading improvement in industrial real estate and later office space, according to Rhonda Deringer in Keegan & Coppin/ONCOR International’s Santa Rosa office.
Rhonda Deringer
“The first quarter was active, and the second quarter was even more active for retail,” Ms. Deringer said. “We’re seeing more nationals coming into the market. Some of the big boxes are getting absorbed, and centers are getting some activity on shop spaces.”
For example, shuttered Mervyn’s stores in Santa Rosa, Petaluma and Fairfied are getting activity from floor- and building-sized tenants, and former Circuit City stores are being repurposed for indoor race tracks and grocery stores.
After jumping from 4.7 percent in the third quarter of 2008, the Sonoma County retail vacancy rate has been around 9 percent since the first quarter of last year, according to Keegan & Coppin. The second-quarter rate for the county’s 17.4 million square feet dipped to 8.6 percent, where it was 18 months ago.
Nationally, retailers catering to July to September back-to-school purchases are anticipating some 5.4 percent growth this year after a 2.8 percent dip last year and 0.4 percent slip in 2008, resulting in total volume projected to surpass the last peak in 2007, according to the International Council of Shopping Centers.
Craig Semmelmeyer
National chains that had put growth plans on hold in early or late 2008 because of the economic recession are starting to shop for space again in the North Bay and rest of the Bay Area, according to Craig Semmelmeyer, president of Main Street Property Services. Yet, he added, such tenants are holding out for “A” properties, or those that garner higher sales per square foot and attract consumers from a wider area than a particular neighborhood.
The Lafayette retail consulting firm has been repositioning and leasing a number of North Bay properties, including Bel Aire Shopping Center and Silverado Plaza in Napa, Pacheco Plaza in Novato and Red Hill in Mill Valley.
“The recession kind of accelerated the retail revolution with more people making Internet purchases and local retail being split between the commodity end and the value-add end with better neighborhood retail and restaurants,” he said.
For example, in downtown Napa celebrity chefs Masaharu Morimoto and Tyler Florence are set to open restaurants later this summer in The Riverfront new mixed-use development, according to Terry Bremer Allison of Coldwell Banker Commercial Brokers of the Valley. Other new downtown venues are Bistro Sabor and Bui Bistro for food plus Carpe Diem and John Anthony Tasting Salon for wine.
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