Investment from outside the region helped fuel commercial property sales in the Quad-Cities in 2017, but a shortage of available inventory and modern space remains a challenge, leaders with NAI Ruhl Commercial said Wednesday.Â
The Quad-City firm offered a snapshot of the commercial market and its performance last year as it hosted more than 450 business leaders for its 5th Annual Market Report at the Quad-Cities Waterfront Convention Center, Bettendorf.Â
"Inventory is the No. 1 story," President John Ruhl said. He said "the shortages run across most disciplines from Class A and B office space to industrial and small retail."Â
He said NAI Ruhl agents sold a total of $133 million in 2017, ranking NAI Ruhl at the top of the Quad-Cities Commercial Multiple Listing Service in total sales. "2018 is starting off strong with a record first quarter and the second strongest March in our company history."Â
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Developments such as Costco, Rhythm City and TBK Bank Sports complex "will encourage development of transitional land north of 53rd Street and eventually spur an increase of inventory on the Iowa side," said Dwayne Anderson, broker associate for Ruhl's land and farm division.
He said the new Kraft Heinz and Sterilite manufacturing plants in Davenport helped the Iowa side lead the way in new industrial sales activity. The Illinois side has been slower to develop, "due to the more stagnant Illinois economy, concerns with Illinois' financial condition and a variety of other challenges including incentives and regulations."
New demands in technology, office size and location are shaping the office sector, said Shawn Langan, commercial sales associate. With telecommuting and other technological advancements, he said office users now are reducing their footprint.
In addition, "High speed internet is just not enough anymore. Users are looking for services such as fiber optic redundancy and back-up power," he said.Â
But he warned that the region's office inventory is aging — with available properties averaging 78 years old. "Many of these properties have been re-purposed in order to stay competitive ... and attractive to tenants."Â
Charlie Armstrong, vice president/director of industrial sales, said the available industrial inventory also is getting older and functionally obsolete, and construction of speculative buildings has not kept pace.Â
In 2017, the majority (85 percent) of the industrial leases and sales completed were for spaces 30,000 square feet and less. "We do receive inquiries for 100,000 square feet, 200,000 square feet and even 400,000 square feet buildings that we are unable to fill due to lack of building inventory," he said. Â
He said if product is unavailable for prospects "their only choice is to build or go elsewhere." "If we don't develop a ready supply of building inventory, we won't attract the growth required by local, regional and national developers to justify new development."Â
Commercial sales, however, have seen success in attracting outside investment. Matt Slavens, commercial sales associate, said there has been an influx of investment from investors "in larger markets trying to find better returns than what are available in their home markets."Â
The result, he added, is it is created a lack of inventory "as quality properties that are listed are selling almost immediately."
The retail landscape locally and across the nation continues to change with a shift to online sales and the loss of many bricks and mortar stores.
Rick Weinstein, vice president/director of Ruhl's retail division, said the Quad-Cities has seen an increase in available big box space not only from stores closings such as Toys R Us, Gander Mountain, Sam's (Moline) and now Younkers, but from relocations such as Hobby Lobby and Dick's Sporting Goods relocating in Davenport. "They have left behind good big box options for new tenants."Â
In a report on the housing market, Chris Beason, Ruhl & Ruhl Realtors' new president, said available inventory also is an issue for the residential market. He said spring sales were delayed by not only the weather, but a shortage of affordable price-point inventory. "We simply don't have enough properties being offered to meet demand."Â