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Retail spaces buoy hope

By: ToLewis, The Press Tribune
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The city of Roseville is issuing 100 new business licenses each month and retail spaces are filling up, giving some the perception that the local economy could be rebounding. Some financial analysts, however, say the overall market in the region still remains flat, thanks to a game of “musical chairs.” Kevin Sheehan, managing director of the Sacramento region for Voit Real Estate Services in Roseville, says the local commercial real estate market is seeing retailers and other businesses move into more ideal locations because of lower rent. Sheehan said business owners are taking advantage of the beaten market and moving into more desirable markets like Roseville. “They’ve got a chance to lease space in the best properties at one third of what they were paying previously,” Sheehan said. He said property owners are offering “huge concessions” to lure tenants, so much so that occupancy costs are almost nothing for the first year of business. While the vacancy rates in larger shopping centers in Roseville might be declining, Sheehan says smaller shopping centers that are located in less desirable locations are becoming more vacant as businesses relocate or close up shop. “Vacancy rates are pretty much where they were about a year ago,” Sheehan said. “You’ve got people changing from one geographic location to the other, but that old location now creates a vacancy. So if you look overall, there’s really not much of a change in the whole region.” Meanwhile, leasing agent Bill Perkins, who leases commercial space for Roseville Square on Douglas Boulevard, says the vacancy rate in his center is rapidly declining. Perkins said when he took over as one of the leasing agents for Roseville Square nearly one year ago, the center was 40 percent vacant. Now, with the addition of Sunflower Farmers Market last month and more retail expected within the next year, including Any Mountain Sports, Incredible Pets and Subway, the center is rapidly filling up. “We’re cautiously optimistic,” Perkins said. “We’re hoping that the light at the end of the tunnel is not another train coming to run us over.” Sheehan said companies like Sprouts, which opened at Stanford Crossings Shopping Center in April, have benefited from retail giants going out of business by being able to purchase or lease large box stores for much less than what they would have been before the market slumped in 2007. “Sprouts is in a big expansion mode because they can get that space for so cheap,” Sheehan said. “Those guys are taking advantage of it to grow their business right now.” Joe Dobrow, vice president and chief marketer for Sprouts, said the company looks for sites that are about the size of a Borders or Circuit City, both companies that have gone out of business, and there are very few companies out there that are looking for spaces like that. “You drive up and down these otherwise really nice communities all over the country, especially in California, and shopping center after shopping center has this big blight that’s empty for years,” Dobrow said. “It’s been very nice for us because we’ve been able to go in and get good real estate at affordable prices and turn what had been a blight on a community into a real asset.” Sheehan said because there has not been, nor will there likely be in the near future, any new construction in shopping centers, office buildings, warehouses and apartments, those markets have likely hit the bottom. “Apartments are kind of what in my opinion are the bright spot,” Sheehan said. “People are going to keep coming to this state. They are going to need services and eventually, they will need housing. Things will come back.” Toby Lewis can be reached at tobyl@goldcountrymedia.com.