The retail market for Louisville has continued to improve over the past year. New ground-up developments, which have been virtually nonexistent the past five years, are now open for business. Vacancy rates are falling, new tenants are entering the market, and retail investment sales continue to be in high demand. The $2.5 billion Louisville- Southern Indiana Ohio River bridges project is on track for a 2016 opening. New developments in downtown and northeast Louisville, as well as Southern Indiana, are looking to capitalize on the new infrastructure.
GBT Realty is looking to expand its presence in the market with a proposed 220,000-square-foot joint venture project across the river in Jeffersonville, Ind. The site is located within in the 170-acre master-planned Jefferson Town Center on Veterans Parkway. Menards is opening a new 200,000-square-foot property this fall across the street from GBT’s proposed development. In addition to GBT Realty’s newly opened Middletown Commons and Jefferson Commons in Louisville, the three projects are from developments that were planned before the Great Recession and now have new life.
The Outlet Shoppes of the Bluegrass, located in Simpsonville, Ky., has been a major success since opening in late 2014. After just six months, an expansion is underway that will include eight new stores including, H&M, The Limited, Abercrombie & Fitch and Johnny Rockets. CBL & Associates Properties and Horizon Group Properties spent more than $50 million on the initial development. The outlet mall has given the community a significant economic impact, including increased revenue and hundreds of new jobs.
Michael Tabor, TRIO Commercial Property Group
The Fern Creek trade area, located on Louisville’s outer belt at I-265 and Bardstown Road, has multiple new developments proposed in this underserved trade area. Southpointe Commons, a 46-acre retail development by Barrister Commercial, is planned to break ground in 2016. Lexington-based Madden Development is also planning a 26-acre development in the trade area that will have to move through the rezoning process. No tenants have been announced for either project at this time.
Costco recently announced plans to build a second store in Louisville at the former Showcase Cinemas site on Bardstown Road just south of the I-264 interchange. The site sat vacant for years before Costco announced plans to build the 153,000-square-foot store in March. Costco will join Target, Lowes Home Improvement, Walmart and Kroger, which have existing locations in the trade area.
Kroger also announced plans to build its first Marketplace store in Louisville at the former Kmart site at 4915 Dixie Highway. The new marketplace stores are 125,000 square feet and will replace the 60,000-square-foot Kroger store a half-mile down the road. Kroger has continued to increase its dominating presence in Louisville.
The retail investment market has remained strong as investors continue to chase Class A shopping centers. The Hocker Group based out of Louisville purchased Bluegrass Manor Shopping Center for $46.1 million at a 6.65 percent cap rate. The center is anchored by Louisville’s only Whole Foods Market along with LA Fitness, Toys “R” Us and Taco Bell.
In late 2014, Toronto-based Slate Properties purchased Stonefield Square, a 90,991-square-foot Fresh Market-anchored center in Louisville. The grocery-anchored investment sector remains in high demand by institutional and the non-traded REIT buyers. Unanchored strip centers have traded at a slower pace and have yielded higher cap rates for investors.
In downtown Louisville, new hotel projects are underway, including the Omni’s 600-room hotel, 175-room Aloft and a recently announced 250-room Canopy Hotel by Hilton in the Republic Building. These hotels will join the recently opened 304-suite Embassy Suites, which opened in April. The Kentucky International Convention Center will be closed from August 2016 to August 2018 for a major renovation. Officials are expecting convention business to increase by 20 percent annually as a result of the remodel.
The Louisville retail market looks to remain strong with new developments on the horizon and retailers currently looking to expand in Louisville. The bridges project will result in infrastructure improvements that will assist traffic flow in downtown, as well as the East End. The outlook for Louisville retail is positive going into next year.
— By Michael Tabor, Partner, TRIO Commercial Property Group. The article was originally published in the September 2015 issue of Southeast Real Estate Business.