Real Estate: Commercial Vacancies Remain Low

The students are flowing back into town and all things related to the University start to show themselves in a big way. I’ve yet to see a three-seater couch on the roof of a two-door sedan secured by arms out the windows — that’s been concerning to me, but the higher percentage of vomit on sidewalks downtown put me at ease.

Of course, there aren’t as many students back as we’re used to. As a result, our tone when we talk about them has a little different inflection. Rather than the typical rejoicing we’d hear about their re-entry into our community — and the subsequent economic stimulus — we’re hearing a tone of concern.

The business community is asking itself: What will our bottom lines look like as a result of far fewer students at MU again this year? Will another decrease in enrollment happen next year? If so, how many more times will it happen? How do we rebound and reverse that trend line to reach (and, dare I say, surpass) some of our previous enrollment highs?

There is no doubt — the news is not good. I feel for the businesses that will be impacted negatively by the change and for the employees at the university who have lost or will lose their jobs as a result.

In our office, we’re fielding calls and questions on a daily basis related to what impact we foresee the enrollment dip having on the commercial industry. Our best and only answer at the moment is that we really don’t know. There is no crystal ball in our industry that can provide that level of clarity. What I can tell you is I think we are well positioned to handle it.

Commercial vacancy rates for retail, office, and industrial space in Columbia are dramatically lower than the national average, and well below St. Louis and Kansas City. These low vacancy rates are a direct reflection of our low unemployment rate, which currently sits at less than 3 percent, a staggeringly low figure indicating a robust local economic climate.

It’s my hope that those who will lose jobs because of MU’s budget reductions will find new and rewarding roles in this community. Our vacancy rate is low because employees are filling offices, cubicles, warehouses, and other commercial facilities across this community. And local companies are continuing to hire, thereby pushing those vacancy rates lower.

There are a lot of positives, with a capital P, in this community. (Speaking of capital P, there are some people with the last name of Porter that could be critical pieces of changing the dialogue at MU this fall and winter.) A little excitement and the atmosphere it brings, mixed in with the many other great things MU and Columbia has to offer, can change the enrollment trend line and change it quickly.

But it won’t happen with us being quiet about it. From our everyday conversations to billboards in St. Louis and Kansas City, we have to promote this town, this university, and all of the great things that are going on here.

I’m starting with commercial real estate. Despite all of the bad news, all the questions, and all concerns, our market indicators are strong right now. Our inquiries and interest in vacant space are comparable to previous years. Dirt is moving, buildings are going up, and the employees are filling those buildings and being productive. Today, that is my best — and only — answer.

Mike Grellner is the vice president of Plaza Commercial Realty.