A semi-annual analysis of Lexington's commercial real estate market, released this week, is further evidence that the city's economy continues to improve.
NAI Isaac Commercial Properties' market report shows that vacancy rates decreased across all categories — downtown and suburban office space, retail and industrial.
"We're continuing to improve despite the national and local economy not being exactly what people want," NAI Isaac president Al Isaac said. "We are progressing, and our commercial real estate market is in really good shape."
Isaac said he expects to see some new retail and office buildings constructed during 2013. But he doubts that it will be "widely spread," and absorption of space should keep pace, so vacancy rates would not be driven up considerably.
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At 5.6 percent, the retail market continued to have the lowest vacancy rate, down from 6.1 percent in July 2012. That segment is anchored by Fayette Mall, which has a vacancy rate of less than 0.2 percent, according to the survey. The retail category also saw absorption at The Mall at Lexington Green, where Anthropologie recently opened, the report said.
The survey relies on information submitted to NAI Isaac and covers 487 commercial properties with about 32 million square feet of space.
The downtown office space category saw its vacancy rate decline 6 percent to 14.2 percent. The suburban office space vacancy rate also fell 6 percent to 13.1 percent.
Jeff Stidham, president of Stidham Commercial Partners, said the declines in office space vacancy rates shows that "we're blessed here."
"Typically, office is still one of the struggling asset classes nationwide," he said. "Many, many markets, most markets, are still suffering from a very substantial oversupply of office."
The decline in industrial vacancy rates came primarily because of increased occupancy in bulk warehouse properties. The report suggested that vacancy rates grew for properties dedicated to distribution, manufacturing, and high-tech/research and development.
Lexington developer Tim Haymaker said the industrial market is lacking in some key areas.
"We've got a client looking for 75,000 (square feet) up to 140,000 (square feet), and it does not exist," he said. "Anything 75,000 square feet and above is very difficult to find as stand-alone industrial."