What to do with all that commercial real estate?
Creativity and renovation needed in slow market
The commercial real estate market in Springfield is currently slow, but that’s just an opportunity for creativity, says Amy Raftis, chairman of Springfield’s Commercial Real Estate Network.
Raftis, also a commercial Realtor with Hurwitz Enterprises in Springfield, says there is a higher-than-normal number of commercial spaces available in Springfield, and they are staying on the market for longer than usual.
The Commercial Real Estate Network (CREN), a listing service run by the Capital Area Association of Realtors, shows about 500 available commercial spaces in Springfield. However, Raftis cautions that it is difficult to get a clear picture of the market from the CREN database because several properties are listed multiple times -- as small spaces within a larger space and as whole buildings. That approach offers flexibility to potential buyers and tenants, but obscures the true number of buildings and square footage available.
A recent survey of the database by Illinois Times attempted to eliminate multiple listings, which yielded about 180 unique commercial spaces available in Springfield, totaling almost 1.5 million square feet. Those numbers do not include commercial spaces for sale or lease directly from the building owner, which are generally not listed in the database.
Commercial spaces are staying on the market about 169 days on average, Raftis says, compared with about 137 days around this time in 2009. Though buildings are staying on the market about one month longer than before, the average sale price is higher this year than last, she notes.
In general, commercial real estate is on a slower cycle than residential real estate, Raftis says. Commercial spaces tend to stay on the market longer than houses, and the commercial market reacts slower to stimuli like tax credits or economic slumps.
“When the residential market fell off sharply, commercial didn’t as quickly,” Raftis says. “We’re following the same trends; we’re just behind.”
Springfield’s downtown contains a significant concentration of empty commercial space, much of it former offices once occupied by state agencies that were moved to Chicago under former governor Rod Blagojevich. According to CREN, there are 35 empty commercial spaces, totaling more than 250,000 square feet, within a half-mile of the Old State Capitol.
Despite the slow market, Raftis says building owners who show creativity are rewarded. One example is building owners offering a tenant an improvement allowance, which adjusts a building’s lease cost to account for possible renovations a tenant might want.
“Things are a little tight for many building owners, so they may not completely renovate a space to attract a renter, but it will be part of the package,” she says. Building owners certainly aren’t giving anything away, but they are open to more creative terms.”
Raftis says renovations that bring new restaurants, apartments or even college campuses downtown would be welcome additions.
“I don’t want to close the door and say we’re never going to fill the office spaces downtown,” she says. “That would be too defeatist, but I think there is some opportunity for redevelopment. It would be great to see some of the downtown spaces renovated, whether it be hospitality on the street level or residential upstairs. We certainly have some beautiful architecture downtown, and if that can be preserved in the process, it helps the city as a whole.”
Check out www.illinoistimes.com for map of commercial spaces available in Springfield.