Louisville's Retail Market Rides Wave of Demand Momentum
Louisville is riding a wave of momentum after hosting its third PGA Championship at Valhalla Golf Club in August. In addition, the $2.5 billion Louisville-Southern Indiana Ohio River bridge projects are under construction and scheduled to open in 2016. This project adds two new bridges, an east end bridge connecting I-265 in Kentucky with I-265 in Indiana, and a second bridge located downtown as part of improvements to I-65. These significant infrastructure improvements are a game changer in the fact that they will improve accessibility to new retail trade areas such as southern Indiana and northeast Louisville.
In anticipation of the Kentucky International Convention Center being dramatically expanded and remodeled, Louisville has five hotels under construction or planned for downtown. Omni Hotels & Resorts will build its first property in Kentucky in Louisville, a 600-room convention hotel at Third and Liberty streets. Estimated to open no later than 2017, the Omni will be adjacent to 200 apartments, a grocery store and retail shops.
The project is a public-private partnership between Omni, Cordish Cos., metro government and the state of Kentucky. REI Real Estate Services and Poe Cos. are developing a 172-room Aloft Hotel located in the central business district at the corner of 1st and Main streets. Additionally, a 300-room Embassy Suites conversion of the former Hilliard Lyons office building is underway.
Louisville is also making a strong push for Bourbon tourism in downtown Louisville. This “Urban Bourbon Trail” consists of more than 27 hotels, bars and restaurants offering a unique bourbon experience with each establishment serving more than 50 bourbon varieties. Urban Bourbon tourist facilities such as the Evan Williams experience are open or in the planning stages.
Gill Holland, the developer of NuLu (East Market District) has committed to revitalizing the historic Portland neighborhood with a $23.5 million project.
GGP’s Oxmoor Center added a 27,000-square-foot, two-story H&M store that opened in November of 2013 as part of a renovation of the mall. New tenants recently opened or announced are Kate Spade, lululemon, Madewell, Michael Kors, Tumi, Rack Room and Alter’d State.
The Northeast trade area has been the growth area of Louisville and has seen an increase in activity with Phase II of Chamberlain Pointe under construction. Louisville’s only lifestyle center, Paddock Shops, formerly The Summit, has recently added Orvis, Lenscrafters and Noodles & Co.
Nashville-based GBT Realty Corp. is under construction with two new ground-up retail centers in Louisville with projected openings of spring 2015. One of the projects, Middletown Commons (250,000 square feet) in the east end of Louisville at I-265 and Shelbyville Road, has a tenant roster including Academy Sports + Outdoors, Liquor Barn, Hobby Lobby, Ross Dress for Less, Rack Room, Texas Roadhouse and Chick-fil-A. Jefferson Commons (230,000 square feet) in the Southeast submarket at Outer Loop and Jefferson Boulevard adjacent to the Jefferson Mall has a tenant roster that includes Academy Sports + Outdoors, H.H. Gregg, Liquor Barn, Michael’s, Shoe Carnival and Buffalo Wild Wings. Both projects were 90 percent pre-leased as of this writing.
Kroger has continued to increase its dominance of the grocery segment in Louisville with the expansion and remodel of three stores in 2014.
A new retailer to Louisville, Boulder, Colorado-based Lucky’s Market opened its fifth store on May 14 in a multi-store expansion across the Midwest and Rocky Mountain region. The new 30,000-square-foot Lucky’s in Louisville is located in the Forum Shopping Center. The chain specializes in natural and organic foods, locally grown produce, groceries and fresh meat and seafood.
Wal-Mart Stores Inc. is building a 150,000-square-foot Supercenter at 18th Street and Broadway. The investment of more than $25 million is the largest economic development project in western Louisville in the last decade. Wal-Mart is also building a Supercenter on its former site on Outer Loop across from the Jefferson Mall.
Cincinnati-based Phillips Edison has purchased the Town Fair Shopping Center (234,364 square feet) on Hurstbourne Parkway, which is anchored by Walmart, for $24 million, and the Central Station Shopping Center (131,000 square feet), which is anchored by Kroger on South Second Street, for $14.5 million.
The Outlet Shoppes of the Bluegrass, a 366,750-square-foot outlet center with more than 80 retailers, opened in July. Part of the Louisville MSA, the center is located between Louisville and Lexington off I-64 (Exit 28). Daily traffic counts exceed 68,000 and more than 1.2 million people live within 30 miles. The outlet center is a joint venture between CBL & Associates Properties Inc. and Horizon Group Properties.
The retail forecast for Louisville is very optimistic and all indicators point to continued growth into 2015.
— By Justin Baker, Principal Broker, Partner, TRIO Commercial Property Group. This article originally appeared in the September 2014 issue of Southeast Real Estate Business.