Midwest Real Estate News recently spoke with Peter Barr, sales associate with Haymaker/Bean Commercial Real Estate in Lexington, Ken., about the recovery his market is now experiencing in commercial real estate activity. Here is what he had to say.
Busier – but not boom — times: Are we seeing more deals, more commercial activity today? Yes. I would describe our local commercial real estate market as being incrementally improved. I say that because it’s just not been a quick recovery since the economic recession. At the same time, because Lexington is a smaller, more insulated market, the city wasn’t hurt as badly as some other markets, either.
No easy deals today: I’d say that everything today is harder and more challenging than it used to be. But we are seeing a higher transaction volume this year from last year. That is the good news. Everyone, though, would like to see a faster recovery.
Positive signs: Our vacancy rate in the retail sector has been going down. It always seems to be in the single digits, which is good for that sector. I also feel that the office sector is significantly improved. Since 2005, 2006 that had been the struggling sector in Lexington. But now some of the office buildings that went up in those years are finally starting to absorb space. The industrial market is pretty stable. Industrial doesn’t change much in our market. We always see vacancy rates in industrial in the low teens. It doesn’t vary that much. We’re stable, thanks largely to our location along the Interstate-75, Interstate-64 corridor.
A resilient market: I think Lexington’s size helps us. It helps protect us a bit from the big swings that other, larger markets feel when the economy changes. Don’t get me wrong. The effects of the recession are still felt here. This has still been a difficult time for us. But you see what has gone on in some of the larger markets, you hear some of those horror stories, and you realize how fortunate you are. Here it is more of an insulated market. We don’t feel the lows as low or the highs as high as some of the bigger markets do.
Future plans: Right now there is a feasibility study going on that is pretty exciting. The city is looking into the renovation of our athletic arena, Rupp Arena. In the process, there are plans to create an arts-and-entertainment district on the west side of the city’s central business district downtown. Right now, it is just a feasibility study. But the talk is definitely exciting. That would hopefully bring with it more downtown housing and more downtown retail and office space. The hope is that it would create a synergy around that district.
A steady future: During the next few months, I think we’ll see a continued slow, incremental improvement in the commercial real estate market. I think that as we continue to absorb space in the office sector, that this will act as a self-corrective for the market in a way. I think you’ll see lease rates stabilize and move closer to where they were before the recession. This isn’t going to happen overnight, though. We’ve learned that already. You can’t turn the ship around that quickly.
