5th Annual State of Commercial Real Estate Presented by Coldwell Banker Lunsford

Mike Lunsford presents his portion of the 5th Annual State of Commercial Real Estate in Delaware County. Photo by: Mike RhodesMike Lunsford presents his portion of the 5th Annual State of Commercial Real Estate in Delaware County. Photo by: Mike Rhodes

Muncie, IN—The 5th Annual State of Commercial Real Estate in Delaware County was presented by Coldwell Banker Lunsford today at the Downtown Courtyard Marriott.

The presenting panel included:  Mike Lunsford, CCIM, Owner, Coldwell Banker Lunsford; Monte Brown, CCIM, Manager of Coldwell Banker Lunsford’s Commercial Division and a long time player in the commercial arena; Chris Caldwell,  Senior Vice President for Business Banking at MutualBank; Michael Hicks, PhD, Director of the Bureau of Business Research at BSU and a nationally recognized expert in business economics and statistics; Jay Allardt, Owner, American United Appraisal, Commercial Appraiser; and Brian Allardt, Commercial Broker, Coldwell Banker Lunsford and former appraiser and developer.

According to Mike Lunsford, “Small markets like ours require fairly extensive research as there is not a comprehensive database. We spend a great deal of time researching city and county records, MLS, speaking with appraisers, owners and using reasoned local knowledge to present as clear and fair overview as possible.”

Mike covered the major segments of the Delaware Co. commercial market in the areas of highest concentration and activity.

The illustration below shows the drivers for the commercial market and how they relate to one another. They all come together to affect the employment level which then becomes the major influence on all phases of commercial real estate. While  Delaware Co. employment continues to improve along with the general economy, Delaware County is lacking the increase in population that usually results.

Illustration: Commercial Market Drivers.

Illustration: Commercial Market Drivers.

Significant Manufacturing and Warehouse activity in 2015 included:

  • 40,000 SF Spec building in Air Park sold to Hillcroft Services
  • 50,0000 SF at 1300 W. 23rd St. sold to Gill Brothers
  • 83,281 SF sold to Gearbox (former CINTAS building)
  • Midwest Metal broke ground on a 40,000 SF expansion

As a result of the loss of two major tenants, there is now over 200,000 SF of ready-to-occupy space in the Downtown Industrial Center. The space can be divided into sections from 30,000 to 199,000 SF.

The newest shell building in the south industrial park was completed and the Air Park building was sold, leaving 2 buildings to attract prospects. The prices indicated are for the unfinished shells and completion will likely add $40-$50/SF to their price. These prices normally may be adjusted through incentives from state and local governments largely based on the number and quality of new jobs. Shell buildings are great activity generators and often lead to opportunities for existing real estate. Prices for privately financed new construction are around $30/SF for pre-engineered steel buildings, plus necessary site work.

Illustration: Available Shell Buildings

Illustration: Available Shell Buildings

The options for those seeking 30-100,000 square feet of manufacturing or warehouse space increased in the 4th Quarter with significant vacancy in the Downtown Industrial Center.

The spec buildings will continue to provide choices in location and flexibility.

Manufacturing has pretty well recovered nation-wide and even more so in IN. We believe we’re an especially attractive location because of the favorable business climate, our proximity to major population centers and the very affordable cost of living and doing business in Muncie and Delaware Co.

Downtown Area

There was  significant activity downtown with the opening of the new hotel and restaurant, and improvement of infrastructure. The Liberty Pass Canal is a nice addition and provides an initial piece of the planned river-front development.

Star Plaza at 400 N. High filled over 7,800 SF and is now completely occupied for the first time. The new vitality downtown will generate more demand for residential housing and the retail services, like grocery and convenience stores to support it.

  • There is increasing activity and demand for good space
  • The new downtown Courtyard by Mariott and Erskine-Green training center will provide more convention activity
  • There is increasing demand for downtown residential space.

Lyndenbrook Area

  • Occupancy remains strong in owner occupied and multi-tenant buildings
  • Some vacancy in Investment Grade single tenant property
  • Lease rates are stable

 Outlook for 2016

  • Reduced vacancy equals opportunity
  • Remains a desirable location
  • Stable lease rates and sale prices

South Tillotson Area

  • Construction began on New MutualBank branch on W. Jackson
  • High occupancy rate for single tenant units
  • Several vacancies in multi-tenant properties
  • Village Pantry renewed lease for 5 years
  • Lease rates remain under pressure for non-prime locations

Outlook for 2016

  • High occupancy rate for restaurants and single tenant units
  • Inquiries and activity increased in 2015
  • Lease rates will remain under pressure
  • May benefit from lack of space on McGalliard Road

McGalliard Road Area

  • Muncie Marketplace completed, fully leased and sold for $198 SF
  • Former Nissan/VW bldg. sold and is re-opening as CARite Auto Sales
  • Former American Chevrolet Building being converted to multi-tenant retail space
  • Former Sirloin Stockade sold to AutoZone for $75.95 SF
  • Retail area continues to enjoy a high occupancy rate. Lack of availability is resulting in older properties like Wendy’s and DQ being refurbished
  • Kmart represents 40% of the vacant space on McGalliard

Outlook for 2016

  • Increase in sales and leasing prices due to lack of space
  • Lack of space will result in older structures being demolished and replaced with new
  • Established businesses are re-investing in façade and décor updates
  • Internet commerce competition will apply to office space and some retailers, but many tenants are restaurants and that sector will remain strong.

Southside Area

  • 642,037 SF available
  • There was positive absorption due to the lease of the former Marsh store in Southway to a flea market and the sale of the former Joker’s Wild to be demolished for a Burger King restaurant

Outlook for 2016

  • Higher occupancy for single tenant properties
  • Excess capacity in retail strips, especially Southway Plaza
  • Downward pressure on lease rates and termsPartner sponsors for the event were: Whitinger and Co, MutualBank, Jay Crew, Rosenbaum & Sons, Indiana Title, Network Property Services, Ball State University, and Pridemark Construction.






The entire Powerpoint presentation including residential information can be viewed at this link.