Reichle Klein Group’s 2024 Mid-Year Retail Market Overview

The Reichle Klein Group mid-year 2024 Toledo, Ohio retail space market survey found key market metrics performing well. Overall market vacancy is down slightly from 7.7% at year-end 2023 to 7.6% in the mid-year survey as 20,936 square feet of space were absorbed in the first six months of 2024. The overall market average asking rental rate declined from year end to $10.13 per square foot as an increase in in-line rents was offset by a decline in anchor space rents.

Users and developers pursuing sites for users have been very active and there has been a lot of deal activity during the first half. In-line uses and out lot or pad sites for restaurants, C-Store Gas Stations, and car washes are in the highest demand. There has also been a fair level of activity for larger format traditional retailers. Developers are seeking vacant or under-utilized sites in established retail corridors for redevelopment opportunities. Most in-line restaurant users want only endcaps with drive-through widow capabilities. There are limited options for this specific requirement and demand simply outstrips the supply of such spaces. Construction costs and higher interest rates are an issue, but deals are getting done at rents in the $30 per square foot range to make the deals pencil out. Independent businesses/entrepreneurs have also been active participants in the deal flow.

The market is experiencing a chicken wave. Active restaurants include Chick-Fil-A, Raising Cane’s, Chicken Salad Chick, Dave’s Hot Chicken, Dairy Queen Grill & Chill, Panda Express, and Broken Egg along with Starbucks. New C-Store Gas Station chains are also coming in a wave that includes Sheetz, QuikTrip and Casey’s all actively pursuing sites. Traditional retailers include Michaels, Boot Barn, Aldi, and Five Below. The car wash wave seems to be cresting with the saturation point near and communities beginning to erect roadblocks to further new construction.

The lone cloud on the market is the growing list of closed Rite Aid stores following their bankruptcy filing and, as this report is being written, the emerging distress at competitor Walgreens, both of which have multiple stores in the market. Rite Aid declared bankruptcy in Q4 2023 just as we were wrapping up our year-end survey. According to their announcement on July 6th, Rite Aid has closed or announced the closure of 15 stores in the Toledo market, with more closure announcements possible in the coming months. This count does not include stores such as Bowling Green and beyond. Within days came news that Walgreens, suffering from the same issues plaguing Rite Aid, would also be closing stores. At this point it appears that some of the stores targeted for closure will be in the Toledo market. Only some of these vacancies have been registered in the survey results captured in this report. More will become vacant in the near future.