During the past 12 months, the Lansing retail market experienced 3 percent absorption; a decline in construction; minimal vacancies; and an increased demand for quality retail space, which bumped asking rental rates modestly higher, says Shawn O’Brien, vice president/retail advisor with the East Lansing, Michigan, office of CB Richard Ellis.

Major discount stores, such as Wal-Mart, Target and Kohl’s, have continued to increase their market share against the traditional department stores, such as JC Penney, Sears and Marshall Field’s. “These large tenants, dollar stores and a multitude of quick-service restaurants absorbed the majority of space in the neighborhood, community and regional centers,” O’Brien says.

More than 1.4 million square feet of combined user-occupied space, mall-expansion space and speculative retail space has been introduced and successfully absorbed into the market during the past 2 years. Several of the major developments include a 150,000-square-foot Wal-Mart (across from the Meridian Mall) and the 45,000-square-foot Chandler Crossings (New Chandler Road corridor), both in the East submarket; the 400,000-square-foot Eastwood Towne Center (U.S.-127/Lake Lansing interchange) in the North submarket; a 180,000-square-foot Menards and a 140,000-square-foot Lowe’s Home Improvement Warehouse, both in the South submarket; and a 162,000-square-foot Menards (Interstate 96/Saginaw interchange), 100,000 square feet of retail space occupied by Michaels, TSC and Gander Mountain (I-96/Saginaw interchange), a 45,000-square-foot Best Buy (Lansing Mall pad site), and 41,000 square feet of new strip center space (I-96/Saginaw interchange), all in the West submarket.

The majority of this space was brought to market in 2002, with only 237,800 square feet of new retail space being completed in 2003. Most of last year’s activity occurred in the East submarket with the development of a Wal-Mart in Okemos and a 45,000-square-foot shopping center on Chandler Road, a growing corridor in East Lansing.

A number of retailers have recently entered the Lansing market, many of which are located in Eastwood Towne Center. New restaurants include Bravo Cucina Italiana, Claddagh Irish Pub, Johnny Rockets, Max & Erma’s, Mitchell’s Fish Market, P.F. Chang’s China Bistro and Smokey Bones BBQ. New retail stores include Tree House Toys and Books, Pottery Barn, Williams Sonoma, Banana Republic, Dick’s Sporting Goods, Mimi Maternity and DSW Shoe Warehouse. Lowe’s Home Improvement Warehouse and Menards have also entered the market in the South and West submarkets.

Tenants have not had many opportunities that could justify the cost of relocation due to limited new construction. “Thus, few new major deals were consummated,” O’Brien says. “Instead, recent leasing activity has focused on renewing existing tenant leases and solidifying building rent rolls.”

The greater Lansing area has a healthy vacancy rate of 9.4 percent, which is slightly more than the figures from 2003. The East submarket is the strongest sector with a 5.6 percent vacancy rate. The North and South submarkets have the highest vacancy rates at 15 percent and 16 percent, respectively.

“Next year, the focus will be on the North submarket, as more than 300,000 square feet of space is under construction adjacent to the new Eastwood Towne Center, including a new Sam’s Club, Wal-Mart and a number of restaurants,” O’Brien says. “Consistently, the majority of future growth has been planned for the North submarket with the continued growth of Eastwood Towne Center, and the development and expansion of several big-box users in St. Johns including Meijer, Wal-Mart and Kroger.”


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