Louisville’s retail market continues to experience a shortage of space in high-demand markets in spite of several new developments opening over the past year. During this period, two major retail developments have been completed with several smaller projects under construction or in the planning stages. Second-generation big box vacancy is virtually non-existent and finding quality shop space is becoming equally challenging. As a result, rents have escalated to historic highs.
The most notable additions to the Louisville market are two neighborhood centers developed by Brentwood, Tenn.-based GBT Realty Corp. Nestled amongst a rapidly expanding residential community and PGA’s notable Valhalla Golf Club in eastern Louisville, the 240,000-square-foot Middletown Commons is anchored by Hobby Lobby, Academy Sports + Outdoor, Ross Dress for Less and Liquor Barn. Jefferson Commons, located in south Louisville, is anchored by Academy Sports + Outdoor, Hancock Fabrics, HH Gregg, Michael’s, Liquor Barn and several fast-casual restaurant concepts.
In western Louisville, BC Wood Properties added Hobby Lobby and Goody’s stores at the 350,000-square foot Dixie Manor Shopping Center. Southwest of the city’s central business district, the redevelopment of Dixie Valley Shopping Center expanded its footprint to include additional soft goods retailers such as Marshalls, Ross Dress for Less, Party City, Hibbett Sporting Goods, Rue21 and Rack Room Shoes.
Kevin Schreiber, The Shopping Center Group LLC
The historically stable Northeast and East retail submarkets have continued to boast high occupancy rates and rising rents. Springhurst Towne Center, the largest power center in Louisville and a major retail generator in this region, is approximately 99 percent leased. The Paddock Shops, the city’s only lifestyle center, has only one box space available with interest from several national retailers. Although future retail development opportunities are limited, Marshall Realty has 20 acres zoned commercial along US Highway 42, although development plans are far from finalized.
St. Matthews is the primary retail core in the East End submarket of Louisville. Two super regional malls — Mall St. Matthews and Oxmoor Mall — are the retail anchors for this submarket. Mall St. Matthews added Cinemark Theater to its anchor mix that includes Dillards, Forever 21 and J.C. Penney. Oxmoor Mall enhanced its upscale line-up with Kate Spade New York, Madewell, lululemon athletica and Altar’d State. Likewise, the contiguous Shelbyville Road Plaza, anchored by Nordstrom Rack, Trader Joe’s, Nike, Guitar Center, Jo-Ann Fabric and Craft Stores and Ross Dress for Less, recently added the city’s first Blaze Pizza and Little Greek along with Qdoba.
Two major developments are proposed for the Fern Creek submarket in the far southeastern portion of the city. Only one will likely materialize as the development teams pursue the same anchor tenants. Although recent residential growth at Bardstown Road and the Gene Snyder Freeway is driving the demand for additional retail product, it could still be several years before development is complete.
In addition to the opening of GBT’s Jefferson Commons, several retailers expanded in southern Louisville. Boot Barn signed a 10,000-square-foot lease at Weingarten’s The Festival at Jefferson Court, with plans to open spring 2016. Wal-Mart Stores Inc. plans to re-enter the market in a redeveloped store it previously occupied.
Western Louisville is the one segment of the market with significant large box opportunities along the Dixie Highway corridor. Two vacant boxes and shop space totaling 50,000 square feet are available at the Kroger-anchored Southland Terrace Center at the northern end of Dixie Highway. Further south along the corridor, Kroger plans to relocate with the opening of a 123,000-square foot Marketplace. Kmart plans to open a 63,000-square-foot storefront where Kroger currently operates. Further south, Target plans to close its 111,000-square-foot store by the end of 2016 and leave the submarket entirely.
With big box leasing limited due to availability, the largest amount of tenant expansion is in the fast casual dining space. Recent restaurant additions include Blaze Pizza, Noodles & Co., Pieology, Taziki’s, First Watch, Little Greek, City Barbeque, Martin’s Barbeque and Panera’s new express format. At the same time existing concepts such as Qdoba, Raising Canes, Chipotle Mexican Grill, Jimmy Johns, Firehouse Subs, Wild Eggs and Tony BoomBozz Pizza continue to expand. One notable new-to-market retailer, organic grocer Lucky’s Market, opened its first location in Kentucky along Hurstbourne Parkway in eastern Louisville.
Like much of the country, the Louisville retail market is vibrant but there continues to be a lack of quality opportunities within the major retail hubs. As a result, concepts that are not presently in the market are losing space to the existing tenant’s expansion. However, if the most pressing issue is the need for more space, this is a good problem for the city of Louisville.
— By Kevin Schreiber, Partner, The Shopping Center Group LLC. The article was originally published in the September 2015 issue of Southeast Real Estate Business.