Retailers, plaza owners break out of lull
Published: November 23,2010
Phoenix Fire Games owners pooled their money to open the Meridian store in early September after failing to qualify for bank financing for a second time in two years.
“We decided we just didn’t want to wait any longer,” said Greg Brashier, one of the family-member owners.
One of the five staff members works full-time at the store, which sells board and card games. The rest help out but keep other jobs for now.
More properties are available and rents are lower now compared to two years ago, Brashier said. Phoenix Fire Games owners negotiated good lease terms on 1,800 square feet in Cherry Plaza, he said.
“We believed the economy is starting to recover,” he said. “But to help break things loose, somebody’s going to have to take a risk.”
Activity is increasing in southwest Idaho retail centers as entrepreneurs move ahead with their plans and landlords get more creative.
“Leasing has been steadily increasing across the board,” said Ben Zamzow, retail specialist with Boise-based commercial real estate firm Thornton Oliver Keller.
Retail vacancy in the Boise area is 12.9 percent, and vacancy in unanchored centers is 21.8 percent, he said. A year ago, total vacancy was 13.1 percent and unanchored vacancy was 24.6 percent, according to TOK figures.
Colliers International pegged retail vacancy at 13.4 percent in the third quarter of this year, including 26 percent of total vacancy in spaces 20,000 square feet or larger. The firm’s third-quarter report notes the larger spaces can take up to five years to refill when national retailers are active, and they haven’t been active recently.
“The majority of activity has been in small shop spaces,” Zamzow of TOK said. “Owners are cutting deals to generate more traffic, help existing tenants and stabilize their centers.”
The number of retail leases completed in the third quarter was the highest quarterly total since the third quarter of 2008, he said. The pickup has occurred even though the Boise area hasn’t seen the growth in temporary “pop-up” stores seen nationally, he said.
Caution persists but retailers are more interested in opening or adding locations, said Ray Frechette, retail specialist with Grubb & Ellis Idaho Commercial Group, Boise.
“It’s almost all homegrown stuff and not the chains, big boxes or corporate stores,” he said.
Hobby Lobby and Dick’s Sporting Goods, which opened large stores in Meridian’s CentrePoint Marketplace this year, were among exceptions. Hobby Lobby built a store and Dicks remodeled a building that another sport retailer vacated.
Frechette said landlords are being more flexible with leases and are willing to share more risk with tenants. Deals are harder to put together, but are rewarding in that they require face-to-face interaction between landlord and prospective tenant.
“I do have a little more interest,” said David Thompson, who owns Library Plaza at Ustick and Cole roads in west Boise. Starlight Mountain Theatre plans to move to Library Plaza and another retailer plans to expand as part of its move to the plaza, he said.
Vacancy is a little lower than it was a year ago, he said.
“We’re making baby steps,” he said. “Last year, everybody was a little more shell-shocked. Now I think everybody’s looking out of the trenches and looking at the opportunities.”
Many of these entrepreneurs can’t find jobs so they start a business instead, he said.
Tight financing remains a big challenge for many small businesses, said Peter Crabb, finance and economics professor at Northwest Nazarene University in Nampa. Many bankers have been unwilling to lend against traditional collateral like inventory and specialized equipment. They are still lending on real estate and vehicles.
But retail sales look better than they did a year ago. They totaled $373 billion in October compared to $348 billion a year earlier, he said. Car sales have increased. Sporting goods and general merchandise sales have stayed flat. Holiday sales are expected to exceed last year’s, he said.