BURNS & NOBLE COMMERCIAL REAL ESTATE

2007 RETAIL MARKET SURVEY

TYLER, TX.

The Tyler retail market continues to be very strong, although the rate of improvement shows signs of slowing. The 2007 edition of the annual market survey completed by Burns & Noble Commercial Real Estate reveals that the vacancy rate for the thirty-nine centers surveyed stands at 7.8%, slightly better than the 8.2% rate in 2006. The total available space stands at 190,414 square feet, down from 201,738 last year.

While the vacancy rate dropped, the average lease rate was virtually unchanged from last year's $11.72 per square foot, coming in at $11.66 per square foot this year. Additionally, the strong space absorption observed in the previous two years has slowed significantly. Only 2,824 square feet of retail space was absorbed, compared to 96,039 square feet in last year's survey.

The strength of the market is demonstrated by the fact that eighteen of the thirty-nine centers are enjoying occupancy rates of ninety-five percent or better. In fact, fourteen of the centers are one hundred percent occupied.

The tremendous spread in lease rates between new centers and older properties continues to be demonstrated in the report as rates range from $5.87 to $26.00 per square foot. High land and construction costs have combined to cause Landlords to try to achieve rates above twenty dollars per square foot in the far South Broadway corridor. For the most part, the properties charging the higher rates have been successful, but recently several vacancies have occurred in these centers, indicating that some tenants may be having difficulty justifying rental payments at these levels.

Development of new retail properties continues to be centered in the South Broadway corridor, with at least four centers in the construction or planning phase at this time. Additionally, a Kohl's Department Store is being built just south of Heritage Drive.

Tyler continues to turn in strong numbers for retail sales. According to the Real Estate Center at Texas A&M University, retail sales per capita were $15,199.00 in the City in 2005, making Tyler the sixth highest city in the State in this category.

The continuation of the vibrant retail market, relatively low interest rates, and the rapid population growth in the Tyler area will result in more retail development in the Tyler area.

We appreciate the cooperation of all the property owners and managers who contributed data for this report. Thanks to Peggie Jenkins of Burns & Noble for compiling the numbers.

 

Taylor Burns, Managing Partner
Burns & Noble Commercial Real Estate Services