SOUTHEAST SNAPSHOT, SEPTEMBER 2010

Louisville Retail Market

Louisville retail continues to experience the effects of the national retail slowdown. During the past 12 months, only two major retail projects have been completed. However, big box tenancy has stabilized, indicating the market might be emerging from the retail downturn.  Additional positive signs are evidenced by several successful, small projects and redevelopments in the city.

Two value-oriented retailers top the list of most notable additions to the market.  JCPenney Outlet is slated to open in October on Preston Highway near the Kentucky State Fair and Exposition Center – the market’s retail core.  The refurbished store formerly housed Value City Department Store.  Additionally, Kohl’s is set to anchor Madden Farms with an 87,294-square foot store scheduled to open this fall.  Situated in Fern Creek in southeast Louisville, the retail center will also include a fast food restaurant and approximately 12,500 square feet of additional retail.

The historically stable northeast and east retail submarkets continue to boast high occupancy rates.  Anchored by Target, Meijer and Dick’s Sporting Goods, Springhurst Towne Center is the area’s major retail locale.  The center has only one big-box vacancy and a limited amount of available small-shop space.  The Summit, the city’s only true lifestyle center, is more than 99 percent leased with a tenant line-up that includes some of the most recognizable names in lifestyle retail and restaurants.

The St. Matthews market, which is home to General Growth Properties-owned centers Mall St. Matthews and Oxmoor Center, continues to be Louisville’s dominant retail destination.  Forever 21 is planning to expand to a prominent anchor position at Mall St. Matthews.  The approximately 100,000-square foot store is slated to open late 2010 or early 2011.  Westport Village, a 168,000-square foot, redeveloped center, has successfully leased storefronts to a variety of local shops and restaurants.  On the other hand, Shelbyville Road Plaza is still struggling to backfill vacant boxes that formerly housed Linens ‘n Things, Circuit City and Wild Oats.

With the exception of the new Kohl’s in Fern Creek, the southern and southeastern sectors of the Louisville market have witnessed no new development since 2009, although several projects are still being contemplated.  However, in reaction to improved sales at Jefferson Mall, Staples joined the tenant lineup at Jefferson Court — a positive sign for the area.

In western Louisville, significant opportunities exist along the Dixie Highway corridor.  In the northernmost section, Kroger-anchored Southland Terrace Center has two vacant boxes with more than 50,000 square feet to lease.  Nicklies Development is redeveloping a 36,000-square foot box farther south on Dixie Highway that was formerly home to Circuit City. In addition, 50,000 square feet is available at the Walmart-anchored Dixie Valley Shopping Center due to Kroger’s relocation farther south. 

Although big box leasing has been limited, several new tenants have entered the market.  Recent restaurant additions include The Tilted Kilt, Zoe’s Kitchen, Lenny’s Sub Shop, Firehouse Subs, Brick House Tavern & Tap, The Pita Pit and Chuy’s.  Sears Outlet opened its first location and Fresh Market opened its second store.  Aspen Dental entered the market and is actively seeking additional locations.  

Like much of the country, the Louisville market has stabilized and is prepared to expand once capital markets improve and funding is more readily available.  The vacant big boxes are well positioned for second-generation tenants as the economy readies for a rebound.  Overall, the outlook for Louisville’s retail market continues to be very positive.

— Kevin Schreiber is a member of the retail team in The Shopping Center Group’s operation in Louisville.

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