Vacancy rates in decline

~ Available work force, location and real estate contribute to the falling numbers.

The "for sale or lease" signs are coming down.

The sale and lease of commercial property in Cape Girardeau and the surrounding area has increased in recent years, local real-estate agents say, meaning manufacturers and distributors are finding the region increasingly appealing.

The main factors: an available work force, strategic location and abundance of real estate.

Tom Kelsey, broker for Lorimont Place Ltd. in Cape Girardeau, also attributes the increased activity to what he says is a drastic difference in the cost of buying an existing industry property versus buying land and constructing a new building.

With steel, fuel and general construction prices increasing drastically in recent times, "it's always more economical to purchase a building already constructed rather than build a new one," Kelsey said.

Nearly 725,000 square feet of commercial space has been sold or leased by his company in the past two years, Kelsey said.

Ed Dust, director of the Sikeston Department of Economic Development, said that when he was hired as the city's economic director about two years ago, the city had almost 1 million square feet of commercial property available for sale or lease. Over the past year, about half of that -- 500,000 square feet -- has been sold or rented.

"The existing commercial buildings and warehouses in our area are beginning to fill up," Dust said. "I show a lot of these buildings, and there's been a lot of activity with prospective clients on the increase."

Existing buildings, however, sometimes have drawbacks, Dust said. The former Essex Wire building has been on the market for several years. Built decades ago, it has low ceilings that many business people don't like.

"The newer the existing building is, the easier it usually is to market because it generally has more bells and whistles," Dust said.

As examples, Dust said the former C&F Foods building in Sikeston was recently purchased by a Bloomfield couple who has leased half of it to Good-Humor Breyers. And Confluent Technology Group last spring expanded into a larger commercial building that had been vacant several years.

"These were buildings that already had what people were looking for," Dust said.

The sale of the 260,000-square-foot former Supervalu distribution warehouse in Scott City to Buchheit in early 2005 marked an uptick in commercial property activity in the region, Kelsey said. Since then, Commander Aircraft moved into a building at Cape Girardeau Regional Airport, Charter Communications relocated to a larger building in Cape Girardeau, and Vitronic's found better surroundings in Dexter, Mo.

So far this year Kelsey's company has sold, leased or has under contract properties totaling nearly 500,000 square feet. This includes the 103,450-square-foot Lee Avenue warehouse in Jackson sold earlier this year to ISI Recycling.

Mitch Robinson, executive director of Cape Girardeau Area Magnet, assisted in the procurement of a buyer for the Lee Avenue warehouse.

"Having this large, vacant Jackson facility occupied will bring many benefits in new jobs and economics to both Jackson and the entire region," said Robinson.

Kelsey said the 75,000-square-foot building in Chaffee that formerly housed Columbia Sportswear was recently sold to S&W Cabinets to accommodate its expansion, and two warehouse properties in Cape Girardeau totaling more than 52,000-square-feet have been sold.

"Nash Road was the preferred location for K's Merchandise to lease a 56,500-square-foot distribution warehouse," said Kelsey, adding his company has a warehouse under contract in Sikeston.

Larger commercial properties tend to be easier to sell than smaller ones, said Cynthia Austin, who sells commercial properties for Realty Executives of Cape County.

"All you have to do is drive down Kingshighway and look at all the for-lease signs on smaller buildings," she said. "There's a lot of them." The commercial realty market has been stable and doing well the past few years, Austin said, but a lot of new properties are being built, and that puts a strain on landlords who own older buildings. Older buildings, she said, often have to be updated to attract buyers or leasors.

The national trend of manufacturing facilities being closed and the consolidation of various distributing operations in the area contributed to the excess space situation of a few years ago, Kelsey said. As the existing supply of industrial properties are absorbed into the market, he expects the new industrial construction market to heat back up.

"In fact, some building speculators and landlords are already looking into some speculative projects," he said.

Austin echoed Kelsey, adding that many new spaces recently built are already filled. She said she has a lease on a new restaurant that will open in January.

jobert@semissourian.com

335-6611, extension 251