There's hope for Columbus retail
After plunging in 2020, central Ohio retail is climbing out of its pandemic hole.
Foot traffic is rising, leasing is up, and new stores are opening throughout the Columbus area, but plenty of clouds remain, especially for enclosed malls and older strip centers in central Ohio, which has more than twice the retail space of the U.S. average.
“A year ago, I definitely thought I was heading into what I thought would be the worst part of my career,” says David Lukes, CEO of SITE Centers, the Beachwood-based firm that owns or co-owns several premium Columbus shopping centers including Lennox Town Center, Polaris Towne Center, Sun Center and Easton Market. “Leasing activity now is the highest I’ve ever seen it. This is the most shocking turnaround I’ve ever seen.”
According to the real-estate information service CoStar, 3.6% of central Ohio retail space is vacant, slightly higher than a year ago and much better than the national average of 5%.
“Columbus looks really good relative to other markets and the U.S. overall,” says Liz Ptacek, CoStar’s director of market analytics for Ohio. “Leasing accelerated noticeably in the first quarter.”
Closures, rent concessions—and a rebound
Retail areas throughout central Ohio were brutalized by the pandemic as shoppers turned to online buying. Among large retail users to close were Art Van Furniture in the Polaris area; Bed Bath & Beyond stores in the Polaris and Grove City areas; six Pet Valu stores and the last three Family Video stores; Pier 1 stores in the Sawmill and Easton areas; AMC Theatres in Lennox Town Center; and Field & Stream at Polaris Fashion Place.
The pandemic also saw a full menu of restaurants shut down. The departures meant shopping center landlords throughout the country lost tenants or had to provide concessions on their rent.
“We wrote more than 100 rent-relief documents – deferments, short-term rent restructures. That was an interesting and difficult experience,” says Chris Stewart, senior vice president of leasing with PEBB Enterprises, a Boca Raton, Florida company that owns Hunter’s Ridge Shopping Center in Gahanna.
This year, PEBB has leased more retail space in the first four months than it leased all of last year, Stewart says.
Many spaces vacated across the region were quickly reoccupied. AMC Theatres at Lennox, for example, was taken over by Phoenix Theatres Entertainment while Field & Steam at Polaris is being converted to a new concept called Public Lands.
Notable openings include Menards on Rome-Hilliard Road, Tractor Supply Co. near Sawmill Road, the expanded La Plaza Tapatia on the West Side, and several stores and restaurants in the Hamilton Quarter development in New Albany and the northern expansion of Easton Town Center.
But while open-air and big-box centers are relatively healthy in central Ohio, other areas continue to face challenges, including older strip centers.
“Landlords seem to be doing better today, especially in A and B quality real estate,” says Gilli Zofan, a retail leasing and sales agent with the Columbus office of Colliers commercial real estate. “The pandemic may have widened that gap between quality sites and C and D properties.”
Zofan notes the pandemic, coupled with stay-at-home workers and last summer’s protests, left a mark on Downtown and the Short North, which remain peppered with for-lease signs.
“The Short North and the urban core were probably hit the hardest,” he says.
While Zofan and others expect those areas to recover as workers return to offices and consumers and diners grow more comfortable going out, other areas face more significant challenges.
Despite the uptick in retail leasing this year, especially in top-tier locations, experts say there’s far too much retail space in the nation – and in Columbus. The U.S. contains approximately 24 square feet of retail space for every person, about five times the amount in the United Kingdom and 10 times the amount in Germany.
Central Ohio has more than twice as much retail space than the national average, in part because it draws many out-of-town shoppers. According to CoStar, the Columbus area includes about 122 million square feet of retail space – more than 53 square feet for each resident.
“The retail sector, even after all these closures and space givebacks, remains oversupplied,” says Ptacek, with CoStar. “We’re still looking at a market that has too much brick-and-mortar retail space, not just in Columbus, but across the country.”
Malls bear brunt of closures
The lion’s share of the closings and retail bankruptcies during the pandemic were mall stalwarts such as J. Crew, Brooks Brothers, Victoria’s Secret, L’Occitane, Aldo, GNC, J.C. Penney, Jos. A. Bank, Ann Taylor, Lane Bryant, The Children’s Place, Justice, Gap, Banana Republic and Francesca’s.
As a result, some mall owners filed for bankruptcy during the pandemic while others appear headed that way, including Columbus-based Washington Prime Group, the owner of Polaris Fashion Place and about 100 other shopping centers.
Despite all those challenges, foot traffic at malls has risen sharply this year. According to the Wall Street Journal, citing data from the firm Placer.ai, mall traffic in March was up 86% from a year earlier.
Central Ohio’s premier indoor mall, Polaris, signed several tenants during the pandemic and is largely occupied, despite the challenges its corporate parent faces. Washington Prime is flirting with bankruptcy restructuring.
The outlook for Tuttle Crossing remains uncertain as the mall continues to lose traditional mall tenants. According to a November report, the mall’s owner, Simon Property Group, planned to let the mall fall into foreclosure, where a receiver would be appointed to manage it.
Eastland Mall continues to limp along with a skeleton crew of tenants and no clear path forward while plans to redevelop the closed Westland Mall into “Weston” were stalled by the pandemic.
Even Easton Town Center, widely considered the premier central Ohio shopping center, has faced challenges. It must fill large holes left by the departure of Forever 21, Bon Vie, New York & Co. and Henri Bendel.
“If you look at a lifestyle center like Easton, it had plenty of disruption with tenants unable to pay rent, but they’ve mostly been able to backfill those spaces,” says Mike Simpson, president of the Columbus commercial real-estate firm NAI Ohio Equities.
“The concerns are greater with Tuttle Crossing. We’ve seen what has happened there. And even Polaris. There are a lot of concerns with those types of malls that are fashion-based.”
Jim Weiker is senior business reporter for the Columbus Dispatch.