market vantagepoint fredericksburg-va

ELITE
RETAIL
▫ FREDERICKSBURG-VA▫
Reports
2014
YEAR END
MARKET VANTAGEPOINT
Overview
Throughout 2014 the improvement in the
retail market was lukewarm for most
areas, with the exception of King
George County. The retail market
witnessed a minor decrease in vacancy
rates, while rental rates and absorption
remained relatively flat year over year.
While last year was tepid, the region is
definitely witnessing market trends that
show an increase in overall health for the
retail sector.
For 2014, overall vacancy in the Region
declined by roughly 40 basis points. As of
the end of 2014 there was 20,844,000 SF
of retail space in the Fredericksburg
Region. The counties of Spotsylvania,
Stafford and the City of Fredericksburg
accounted for 93% of the Region’s retail
inventory.
The past year the region observed a
small increase in construction
completions and deliveries with one
growing trend in our market. The Trend?
Over 90% of new construction
completions were free standing, single
tenant buildings. Currently there are a
handful of multi-tenant retail buildings
that are in pre-leasing stages. Preleasing
efforts on each are coming along fairly
quick, with increased interest from
National credit tenants.
Sure signs of continued recovery
following the “great recession” were
more noticeable during the year as
some long-time vacant, and new large
retail spaces were occupied.
Two of the most notable occupancies
were seen at the Spotsylvania Crossing
Shopping Center. Including Gabe’s who
leased the 55,000 SF former Giant
Grocery space , occupying a space
that had remained vacant for over 4
years. Northern Tool also leased 15,295 SF
at the Center. The opening of Gabe’s
marks their second location in Virginia,
and Northern Tool their first location in
the Region.
Leading the Way
Over the past few years and continuing
in 2014, King George is experiencing
major changes in the retail market. King
George has seen an increase of $4 in
retail rental rates (Current: $16.46 PSF)
and a steady decrease in retail
vacancy, to 3.7% (the lowest in the
region) over the past 2 years. This
change can be mainly attributed to the
King George Gateway Shopping Center
in which a 72,000 sf retail building is
under construction and will open fully
leased.
A few notable new retailers who signed
on in 2014 are Peebles, Hibbett Sports,
and Rue 21 that will open at King
George Gateway in 2015. Quick
Service/Fast Casual restaurants are
quickly expanding as Cook-Out selected
multiple sites which will be their most
northern company locations. O’Reilly's
Auto Parts, a new addition to the region
has eyed expansion and multiple
locations, one of which will be
constructed adjacent to the newly
opened Merchant’s on Route 17 at
Celebrate VA North.
With definitive housing growth poised for
our region and large residential projects
underway, the retail market should
continue on the current path of
recovery.
Vacancy
Overall retail vacancy
decreased by 40 basis points
to 5.02% in 2014
Lease Rates
The Average Effective lease
rate in 2014 slightly increased
for the region. King George led
the way with a nearly $2
increase.
Absorption
=
Overall Absorption was
comparatively flat from a year
prior
Fredericksburg Region: Current Stats
Region
High
Low
Rental
Rates
$14.08
Stafford
$16.68
Caroline
$8.44
Vacancy
5.02%
Caroline
5.90%
KG
3.70%
Inventory
(SF)
20.8M
Spotsylvania
9.27M
Caroline
0.5M
Demand
Supply
Retail
Gap
Industry
(Potential)
(Sales)
in Billions
in Billions
in Billions
Retail
Trade
$3.870
$3.033
$0.836
Food &
Drink
$0.418
$0.287
$0.130
Totals
$4.288
$3.321
$.966
$966M TOTAL RETAIL GAP
Data contained herein has been obtained from third party sources deemed reliable; no warranty, expressed or implied, is made regarding the accuracy,
adequacy, completeness, legality, reliability or usefulness of any information. List of Sources are available upon request.
Coldwell Banker Commercial Elite | 1201 Central Park Boulevard | Fredericksburg, Virginia 22401 | 540.786.1402 | www.cbcelite.com
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S
RETAIL
▫ FREDERICKSBURG-VA▫
T
A
T
MARKET VANTAGEPOINT
S
$18.00
20.0%
$16.00
15.0%
$14.00
10.0%
$12.00
5.0%
$10.00
0.0%
$8.00
-5.0%
$6.00
-10.0%
$4.00
-15.0%
Fredericksburg
City
Stafford
King George
Spotsylvania
Caroline
Region Avg
2012
$12.44
$15.93
$12.48
$15.30
$12.39
$13.71
2013
$12.76
$16.05
$14.33
$14.16
$9.64
$13.39
Q42014
$14.97
$16.68
$16.46
$13.83
$8.44
$14.08
Change
17.00%
3.00%
14.00%
-2.00%
-12.00%
5.00%
Retail Inventory By County/City (2014)
Vacancy Rates By Sub Market Q2 2012- Q4 2014
9.00%
Vacancy Rate
Asking Rent Change
Asking Rent PSF
Asking Annual Retail Rental Rates, By Year and Sub Market 2012-2014
818,466
501,437
4,803,586
7.00%
5,449,832
5.00%
3.00%
1.00%
4Q12
2Q13
4Q13
2Q14
4Q14
Region Avg
7.64%
6.52%
5.48%
5.54%
5.02%
Fredericksburg City
4.50%
4.10%
3.70%
4.50%
4.00%
Spotsylvania
6.20%
6.00%
6.10%
6.40%
5.60%
Stafford
7.70%
8.10%
6.70%
6.90%
5.90%
King George
5.30%
5.60%
4.40%
3.40%
3.70%
Caroline
14.50%
8.80%
6.50%
6.50%
5.90%
9,271,037
Stafford
Fredericksburg City
Caroline
Spotsylvania
King George
Data contained herein has been obtained from third party sources deemed reliable; no warranty, expressed or implied, is made regarding the accuracy,
adequacy, completeness, legality, reliability or usefulness of any information. List of Sources are available upon request.
Coldwell Banker Commercial Elite | 1201 Central Park Boulevard | Fredericksburg, Virginia 22401 | 540.786.1402 | www.cbcelite.com
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2014
▫ FREDERICKSBURG-VA▫
Retail Construction Report
CONSTRUCTION COMPLETIONS 2014 (By Retail Type)
Tenant(s)
Address or
Center Name
City/County
Bldg. Size
Building Type
Completion
Cowan Crossing
CVS
Fredericksburg
13,281 SF
Free-Standing
Q2 2014
Cowan Crossing
First Citizens Bank
Fredericksburg
4,154 SF
Free-Standing
Q1 2014
2017 Lafayette Blvd
Family Dollar
Fredericksburg
8,320 SF
8484 Kings Hwy
Family Dollar
King George
8,000+ SF
Cosners Corner
Sheetz
Spotsylvania
6,011 SF
Massaponax Church
Road
Sheetz
Spotsylvania
6,489 SF
Harrison Crossing
Goodwill
Spotsylvania
11,195 SF
Harrison Crossing
McDonalds
Spotsylvania
4,393 SF
Harrison Crossing
Wendy’s
Spotsylvania
Celebrate VA North
Merchants
Stafford
6,192 SF
Celebrate VA North
Goodyear
Stafford
6,066 SF
Cosner’s Corner
Goodyear
Spotsylvania
5,960 SF
Stafford Marketplace
Verizon & Chipotle
Stafford
9,900 SF
Free-Standing
Q4 2014
Free-Standing
Free-Standing
Free-Standing
Free-Standing
Free-Standing
Q1 2014
Q2 2014
Q1 2014
Q4 2014
Free-Standing
Free-Standing
Free-Standing
Free-Standing
Multi-Tenant
This table represents some of the major retail construction completions in 2014.
Data contained herein has been obtained from third party sources deemed reliable; no warranty, expressed or
implied, is made regarding the accuracy, adequacy, completeness, legality, reliability or usefulness of any
information. List of Sources are available upon request
1201 Central Park Boulevard | Fredericksburg, Virginia 22401 | 540.786.1402 | www.cbcelite.com
Q3 2014
Q1 2014
Q4 2014
Q4 2014
2014
▫ FREDERICKSBURG-VA▫
Retail Construction Report
CONSTRUCTION STARTS (UNDERWAY)
Address or
(shopping center
name)
Tenant(s)
City/County
Building Size
Estimated
Completion
King George Gateway
Peebles, Hibbett Sports,
Petco, Goodwill, Famous
Footwear, Rue 21, UPS
Store
King George
72,000 SF
Q1 2015
Harrison Crossing
Taco Bell
Spotsylvania
1,972 SF
Q1 2015
Spotsylvania Towne
Center
Lay-Z-Boy Furniture
Relocation
Spotsylvania
10,000 SF
Q1 2015
Smith Station & Gordon
Road
Dollar General
Spotsylvania
9,100 SF
Q1 2015
Dahlgren Road & King
Hwy
Sheetz
King George
4,000+
Q2 2015
This table represents new construction starts in 2014.
Data contained herein has been obtained from third party sources deemed reliable; no warranty, expressed or
implied, is made regarding the accuracy, adequacy, completeness, legality, reliability or usefulness of any
information. List of Sources are available upon request
1201 Central Park Boulevard | Fredericksburg, Virginia 22401 | 540.786.1402 | www.cbcelite.com
RETAIL
▫ FREDERICKSBURG-VA▫
ELITE
Reports
2014
MARKET VANTAGEPOINT
Due to years of consistent
construction growth in
Fredericksburg, Spotsylvania and
Stafford the market has become
over saturated with availability of
similar retail space. Absorption of
empty space has been slow and
new retail construction limited.
Although there were some major
leases completed in 2014, leasing
activity also remained fairly flat.
The Year of the Stand-Alone
The vast majority of new
construction during 2014 were FreeStanding single-tenant buildings with
only a few multi-tenant buildings.
The largest retail construction
project that our region has
witnessed over the past few years is
the 72,000 SF multi-tenant building at
King George Gateway that is
currently under construction.
Cowan Crossing in the City of
Fredericksburg is gaining interest
from National retailers. Construction
was completed on the first few
buildings at the new retail center,
with First Citizens Bank and a CVS
Pharmacy opening to start 2014. A
8,500 sf retail building is currently in
pre-leasing stages and nearing 100%
leased. This multi-tenant retail
building is one of a couple that are
planned for construction in 2015.
The past year was also one of
expansion for a few retailers in the
region, representing a large amount
of construction completions for 2014.
Goodyear, Sheetz and Family Dollar
each added 2 new locations while
Dollar General added 1 in 2014.
Dollar General and Sheetz also had
one additional store that broke
ground in 2014.
Positioned for Growth
Fast-Casual and Quick Service
restaurants are showing prominent
growth in the region, a trend that is
also being witnessed on a national
level. A recent report indicated a
10% growth in the industry over the
past year up from $35 Billion in 2013.
A new restaurant concept that is
expanding into the region, CookOut, who has 3 stores in the pipeline
for the region, and will also be home
to the company’s northern most
locations. McDonalds and Wendy’s
opened new stores at Harrison
Crossing and Taco Bell is well
underway with a new store at the
center. Chipotle also added a new
location in Stafford in Q4 of 2014.
Slated for construction in 2015 are 2
Burger King stores while Chipotle is
looking to add 2 more locations as
well.
Construction & Expansion
Highlights 2014
Sheetz opened 2 new
locations in the Region in 2014
with 1 additional store in
development
Family Dollar opened 2 new
locations
Dollar General opened 1 new
store and broke ground on an
additional store. The store that
is currently under construction
is said to be one of the most
expensive DG builds in the
Nation
Relocation of Lay-Z-Boy Store is
Underway; Construction on
New Building at the
Spotsylvania Towne Center is
near completion
Construction of a First Citizens
Bank and a CVS Pharmacy
was completed and Opened
at Cowan Crossings
The Fredericksburg region will witness
the continued growth in the Quick
Service/Fast Casual Restaurant
sector of the next few years.
Data contained herein has been obtained from third party sources deemed reliable; no warranty, expressed or implied, is made regarding the accuracy,
adequacy, completeness, legality, reliability or usefulness of any information. List of Sources are available upon request.
Coldwell Banker Commercial Elite | 1201 Central Park Boulevard | Fredericksburg, Virginia 22401 | 540.786.1402 | www.cbcelite.com
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RETAIL
▫ FREDERICKSBURG-VA▫
ELITE
Reports
2014
MARKET VANTAGEPOINT
King George Gateway : 72,000 SF Retail
While construction completions
remained limited there are projects
underway and in the pipeline to
be completed in 2015, such as the
72,000 SF of retail at King George
Gateway which will be completed
Q1 2015.
The Current Trend:
In-Fill Development
With the exception of the new
building at King George Gateway
there has been a noticeable shift
in planning of new construction.
The past few years have given way
to a current trend in our market,
where new smaller 8,000-10,000 SF
centers are becoming the norm for
expansion......for now.
Pre-leasing efforts are also seeing
improvement from past years and
will be illustrated in 2015 as
numerous multi-tenant buildings
are quickly reaching financing
requirements. Efforts are nearing
completion on 3 known multitenant buildings including 8,500 SF
at Cowan Crossings, 9,700 SF at
Carter’s Crossing and 8,400 SF at
King George Gateway which are
planned for construction in 2015.
Multi-tenant building that are in
pre-leasing stages are also being
pursued by national, credit tenants
who are beginning to expand
throughout the region. This is
following years of fairly stagnant
expansion by these retailers, which
should continue to increase as the
market improves.
The 8,500 SF planned building at
Cowan and the 9,700 SF planned
building at Carter’s Crossing are
nearing 100% leased status, with
each attracting national food
retailers. Each of these two
buildings are planned to be
constructed in 2015. Pre-leasing
activity at these locations also
signify the highest actual retail
lease rates in the region, although
they are not represented in the
statistics.
Electronic Cigarette retailers are
continuing to expand throughout
the region a trend that is not soon
to slow down. The E-Cigarette
market is continuing to grow each
year up from $2.5 billion at retail
last year and are expected to
surpass $3.5 billion this year. ECigarette sales are estimated to
surpass tobacco sales within the
next decade at the current year
over year growth rate.
The Pipeline: Planned
Retail Expansion
Cook-Out Expanding into the
Region with 1 store under
construction and 2 more in the
pipeline
Starbucks signed on at a new
commercial development on
Route 17 with 1 additional store
in the works
O’Reilys Auto Parts has closed
on the purchase of 2 locations
and in the process of finding
additional locations
Chipotle has signed on for 3 new
locations in Fredericksburg and
Stafford
Freddy’s Burgers & Shakes has
signed on at the planned 9,900
SF Multi-Tenant Building at
Carter’s Crossing
Construction started on a 72,000
SF Retail Building at King George
Gateway which will add 3 new
retailers to our Region: Hibbett
Sports, Peebles, & Rue 21
Data contained herein has been obtained from third party sources deemed reliable; no warranty, expressed or implied, is made regarding the accuracy,
adequacy, completeness, legality, reliability or usefulness of any information. List of Sources are available upon request.
Coldwell Banker Commercial Elite | 1201 Central Park Boulevard | Fredericksburg, Virginia 22401 | 540.786.1402 | www.cbcelite.com
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