During the past 12 months, the Louisville retail real estate market has proven itself to be full of opportunities as well as challenges. An almost equal amount of developments were completed since the beginning of last year as were put on hold. Likewise, as many stores have opened as have closed, and as many submarkets have thrived as have struggled. In spite of these inconsistencies, the Louisville market finds itself uniquely well-positioned for resumed retail growth as the national economy rebounds.
The northeast and east retail submarkets remain extremely stable. Within these markets there are more than 2 million square feet of retail space including some of the city’s premier shopping destinations. The Summit, the city’s only lifestyle center, is more than 98 percent leased with a tenancy that boasts some of the most recognizable names in lifestyle retail and fast casual dining. Likewise, Springhurst Towne Center is more than 90 percent leased with the anchor tenants Target, Meijer, TJ Maxx, Liquor Barn and Dick’s Sporting Goods. The landscape will continue to evolve with the completions of Phase I of Chamberlain Pointe, a mixed-use center, and North Commons, a town center development.
St. Matthews continues to be widely considered the primary retail hub of Louisville. General Growth Properties’ Mall St. Mathews and Oxmoor Center anchor this retail corridor with a combined occupancy rate of 94 percent. Liquor Barn is expanding with its fifth store under construction. However, due to the bankruptcy of Linens ‘n Things, Circuit City and Wild Oats, Shelbyville Road Plaza has a significant amount of available space.
Retail has lost a great deal of its momentum in the southern and southeastern sectors of the Louisville market. Of the 800,000 square feet of new development proposed at Bardstown Road east of Interstate 265 in 2008, only one Kohl’s-anchored development appears to be moving forward in the near term. The three retail developments originally proposed for the area south of the Outer Loop are stalled. Nevertheless, Jefferson Mall and Festival at Jefferson Court remain stable properties with marginal vacancy.
Dixie Highway, the retail corridor on the west side of Louisville, offers a mixed bag of retailers and retail projects. In the northernmost sectors, 50,000 square feet of retail space is presently available at Southland Terrace; only a former Circuit City box is vacant in the mid-market area. With the expansion of an existing Kroger store by Nicklies Development, the southernmost section of the trade area continues to be relatively stable.
One of the most significant challenges for retailers expanding in Louisville is the limited amount of new retail development. Target, Kohl’s, Liquor Barn, Walgreens and Staples have committed to new stores, while mid-size retailers — such as Dr. Bizer’s Vision World, Vitamin Shoppe, Feeder’s Supply and Verizon — move forward with their expansion plans. Kroger is actively seeking new sites and expansion opportunities throughout the market. The value-oriented restaurant segment continues to grow through the aggressive expansion plans of Five Guys Burgers & Fries, Jimmy John’s, Logan’s Roadhouse, Qdoba, Taco Bueno, Buffalo Wild Wings, Jason’s Deli, Shiraz and Zoe’s Kitchen.
Overall, Louisville is weathering the economic storm in a reasonable fashion. The city’s wide and diverse employment base has insulated the market from sharp declines in consumer spending and the consequential repercussions of dramatic economic fluctuations. The result is a retail market that appears to be well-positioned to capitalize on future retail opportunities as economic conditions continue to improve.
— Kevin Schreiber is an associate in The Shopping Center Group’s Louisville office.