The retail market of Lawrence, Kansas is out of balance, with space growing much faster than demand for that space.
Growth in supply
· From 1995 into 2007, the stock of retail space grew by 3.0 percent per year.
Growth in demand
· The inflation adjusted pace of growth in demand for retail space is growing at a rate of little less than 1 percent per year.
· The number of retail firms has been effectively flat and retail employment has fallen from 2001 to 2007.
· The mismatch between the pace of growth in supply and the pace of growth in demand is large (supply is growing at a pace 3 times the pace of growth in demand), and it is long-term (lasting more than a decade).
· Proposed developments will add over 800,000 square feet of retail space. This represents an increase in the already overbuilt stock of over 12 percent.
Consequences of the mismatch
· There is over 540,000 square feet of vacant retail space in Lawrence, 395,000 south of it river.
· About 364,000 square feet of this vacant space south of the river is in general merchandise, automotive, and food use, a category that developers are seeking to expand further.
· General merchandise space, which makes up about one-half of the total stock of space, has a very high vacancy rate of 13.5 percent. Even if North Lawrence is removed from the stock general merchandise space has a vacancy of 10.1 percent, which is twice the level of a healthy market.
· The surplus stock is creating blight that was contained in North Lawrence, but now it is spreading.
· The City cannot absorb more space; additional stock will only increase vacancies throughout the City.
· The City needs to protect itself from the harm of this overbuilding by slowing the pace of retail development.